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Taking Stock Of The Daschle Charges
Tom Daschle's nomination to be Secretary of Health and Human Services has hit a serious snag, in the wake of a string of revelations mostly related to his payment of taxes on income he received as part of his consulting activities since he left the Senate in 2004.
Looking at a range of news reports, there are several different charges out there, each of varying degrees of seriousness. So -- leaving aside the real-world question of which of these charges might be the most politically damaging to Daschle's nomination -- it's worth taking stock of what exactly the former Senate leader stand accused of. And of how, at least initially, might we rate the seriousness of each individual misdeed.
Let's run down the list:
1. The most serious charge -- which comes from a report conducted for the Senate Finance committee, which is handling Daschle's nomination -- is that from 2005 to 2007, he failed to report on his taxes income from the use of a limousine and driver totaling over $255,000, and provided by InterMedia Advisors LLP, a private-equity firm. On January 2, Daschle, having concluded that he owed the money, filed amended returns and paid more than $140,000 in back taxes and interest.
InterMedia, whose advisory board Daschle chairs, was founded in 2005 by Leo Hindery, a politically connected media and telecommunications executive (with an apparent record of embellishing his personal story). Hindery gave at least $42,000 to Mr. Daschle from 1997 to 2004.
Daschle told the committee that he realized last June that the limo service might count as taxable income, and asked his accountant to look into it. A Daschle spokeswoman said the accountant didn't come back to Daschle until late December or early January with a finding that the taxes were owed. Only then did Daschle inform the Obama transition team. "He thought his accountant was taking care of it," the spokeswoman told a reporter.
2. The Finance committee is also probing a second potential tax impropriety stemming from Daschle's relationship with InterMedia. The committee says he failed to report on his 2007 tax return consulting income from the company of $83,333.
But this one appears to be an oversight, if a careless one. According to the committee report, Daschle received that sum per month (or a $1 million a year) from InterMedia under the consulting arrangement. InterMedia left off one monthly payment -- the one for May 2007 -- from the annual statement of income it sent Daschle. The error occurred because the InterMedia staffer normally responsible for reporting such payments was on maternity leave, according to the committee. All the other months were accounted for.
3. The issue that almost certainly has the greatest relevance for Daschle's desired new job as HHS Secretary is his work on behalf of healthcare-industry interests.
In his financial disclosure statement, Daschle reported getting paid more than $390,000 for giving speeches to groups including America's Health Insurance Plans (AHIP), a trade organization representing health insurers. He also got nearly $100,000 from health-related companies affected by federal regulation, including more than $5000 (again, the exact figure wasn't reported) for giving "policy advice" to the insurer UnitedHealth.
4. The committee is also probing Daschle's ties to Educap -- a student loan company that paid Daschle over $5,000 for "policy advice," according to his financial disclosure report. (The exact amount wasn't disclosed).
The inquiry is focused on whether "travel and entertainment services" given to Daschle by Educap and several related entities should have been reported as income. At issue, it appears, are two trips Daschle took on EduCap's corporate jet, one to the Bahamas, the other to the Middle East, to speak with members of the board of directors of a related organization. On the latter trip, Daschle and his traveling companions met with King Abdullah of Jordan, and Israeli minister Ehud Barack, according to the Daschle spokeswoman.
In addition, Daschle has worked during the last few years for Alston & Bird, the high-powered DC law and lobbying firm, which was registered as a lobbyist for EduCap. Some on the committee have suggested that Daschle should himself have registered as a lobbyist for Educap.
So what should we make of all this?
Individually, each charge -- with the exception, perhaps of the until-recently-unpaid taxes on the InterMedia car and driver -- might be seen as not much more than business as usual for a former Congressional leader who has slipped through Washington's revolving door to offer his contacts and expertise to private interests. But cumulatively, they paint a picture of a Washington insider who, at best, has grown negligent about tracking the various forms of compensation he's receiving.
Perhaps more important, Daschle's coziness with corporate interests, many of whom will have key business before Congress and the Obama administration, could complicate the larger task of reducing the influence of the private sector in Washington.
For instance, there's nothing explicitly nefarious about Daschle's work on behalf of health insurers. But interests like AHIP and UnitedHealth have, by and large, stood in the way of efforts to remove our healthcare system from the grip of private interests, which many see as a prerequisite for real reform. Of course, that likely won't happen without at least neutralizing the opposition of the private insurers -- so perhaps Daschle's ties to those insurers make him ideally suited for the role. But at the very least, it would be nice to know what kind of "policy advice" he gave his corporate clients.
Late Update: One additional angle we might have noted. The Finance committee report also found that, from 2005 to 2007, Daschle overstated the deductions to which he was entitled for charitable contributions. When he filed amended returns, he reduced the deductions by almost $15,000.
Late Late Update: Jonathan Cohn of The New Republic adds his well-informed and somewhat more favorable take on Daschle's ability to stand up to private healthcare interests:
On reform, Daschle favors the mainstream Democratic position, which relies primarily on private insurance to deliver coverage--although it also calls for creating a new public plan, into which anybody could enroll. That would put him a bit to my right, insofar as my touting of single-payer as a technically superior--if politically inferior--reform puts me to the mainstream's left. But Daschle's philosophy on health care seems, if anything, to be slightly to the left of where I'd expect a politician of his background (ideological, geographical) to be. And it's exactly where President Obama is, for better or for worse.What's more, Daschle is very bullish on scrutinizing new treatments for their cost-effectiveness, an idea that the drug and device industries oppose strongly. He's also proposed heavy regulation of the insurance industry and been explicit about the public plan, two positions that don't go over particularly well with most insurers (or many other corporate interest groups, for that matter). Finally, having both heard and read Daschle on many occasions, I believe he is genuinely offended by the way our health care system ruins the lives of countless Americans--and genuinely committed to solving that problem, regardless of which special interests that solution may offend.













You forgot charge #5 -- Being a mealymouthed weenie back when he was in the Senate, still not quite eclipsed by Harry "Hall Monitor" Reid in that department. And his prevarications and general unreliability apparently continue to this day!
As Dan Savage might advise, DTMFA.
February 2, 2009 1:14 PM | Reply | Permalink
Agreed! DTMFA!
February 2, 2009 2:36 PM | Reply | Permalink
Very well summarized - charge #5 is it?
February 2, 2009 3:31 PM | Reply | Permalink
Oh, man. I was hoping he could go for confirmation hearings, and perhaps ask a question of our Dear Leaders: Do you think maybe now we can find out who tried to kill me?
February 2, 2009 4:30 PM | Reply | Permalink
sera,
As a Senate leader Daschle gave me the impression that the Dems should never have a red state Senator as Majority/Minority leader.
Harry Reid reinforces that opinion.
February 2, 2009 5:54 PM | Reply | Permalink
Daschle's influence on health care reform will have a double whammy since he will fill both the in-house-czar post and the HHS top job.
February 2, 2009 2:10 PM | Reply | Permalink
Not to worry; The Beltway crowd (this includes Obama) will make nice and approve Mr Milquetoast, even as some whip him with a wet noodle (standard Senate issue)
February 2, 2009 2:13 PM | Reply | Permalink
There’s also the fact that his (second) wife is a lobbyist for the airlines and aerospace corporations.
Rolling Stone's Matt Taibbi said of Daschle:
Surely Obama and the country could do better. It’s embarrassing having to justify these guys who can’t even pay their frickin’ taxes.
February 2, 2009 2:28 PM | Reply | Permalink
Agreed... Taibbi called him a whore, in fact, and Greenwald linked to that today:
http://www.salon.com/opinion/greenwald/2009/02/01/daschle/index.html
February 2, 2009 8:29 PM | Reply | Permalink
Mr. Roth understates the importance of the tax issue. Daschle clearly knew he had income by reason of the car and driver, yet he failed to report it until it became politically expedient for him to do so. This arguably amounts to tax fraud-- though it's very difficult to prove--which in some circumstances is punishable by imprisonment. (Think, Leona Helmsley; Wesley Snipes.)
How can we ask Americans to pay their share if our leaders can't be bothered? The new administration sets a terrible example by appointing Daschle.
February 2, 2009 2:33 PM | Reply | Permalink
Couldn't verify the veracity, but this was just sent to me via email:
“Make no mistake, tax cheaters cheat us all, and the IRS should enforce our laws to the letter.” — Senator Tom Daschle, Congressional Record, May 7, 1998, p. S4507
Well, to be fair, he didn't mention tax mismatchers....
February 2, 2009 3:45 PM | Reply | Permalink
It's #3 that concerns me, I guess you pretty much covered the pro and con sides of the relationships. I like someone with connection in congress if that means they're more likely to get something through--but not if it involves the private insurers who have been the problem.
February 2, 2009 2:34 PM | Reply | Permalink
A 'lobbyist' does not formally register as one to avoid the scrutiny and rigid financial reporting required by federal law. This allows him or her to be more flexible working with clients. A large firm employs enough 'registered lobbyists' to 'walk the halls' of Congress, visiting and button-holing members to vote for legislation of interest to its clients.
I doubt that, if Mr. Daschle had been 'registered', he would have been so careless in his record-keeping. Mr. Daschle said that the use of the limo was a favor from a personal 'friend.' That's a stretch!
February 2, 2009 2:36 PM | Reply | Permalink
"Stretch"
"Limo"
Yeah, I get it.
February 2, 2009 2:47 PM | Reply | Permalink
I ran for a house seat in my state ...a house seat - if I would have "made a mistake" and not paid 120K+ in taxes, I'd been tarred and feathered by my own party - and left out to swing on my own.
He didn't forget - he knew - and it just demostrats that Dashel and guys like him who have been cloistered in Washington apparently feel that they have a different set of rules they get to play by.
Obama is dead wrong here - wrong - this is not "change I can believe in" - what I see going on here is political payback.
Daschel is there to make sure if there is reform in our healthcare - that the Insurance companies get their large piece of the pie...
This is no way for a new President to start off - first Geitner (opps I made a mistake) Jesus - that's like saying I build houses for a living, but forgot to put the roof one - my bad - forgive me. Daschel needs to go - and if he doesn't - that all the crap that my hungry and hopeful ears heard everyday for over a year ...about change and accountablility - was just that - and crap flows down hill --- and the American people are at the bottom of the hill ... and Obama is the new plumber, just a different uniform.
February 2, 2009 2:43 PM | Reply | Permalink
While they all concern me, as a consultant for over ten years I can definitely address items one and two.
1. It's pretty evident that this is out and out cheating. A bennie from an employer that you did not report. A quarter of a million dollar bennie. Six months for your accountant to "look into it". I was born at night, but not last night.
2. A mismatched 1099? Almost all of my 1099s don't match my income. You report what you made, not what any one else says. Another try at cheating. He did not think he'd get caught. He did.
How in the world can any Senator vote for this guy. But they voted in Geithner, so it shouldn't be any surprise.
February 2, 2009 2:46 PM | Reply | Permalink
Obama's "absolute" support for Daschle doesn't seem so nifty.
February 2, 2009 2:51 PM | Reply | Permalink
Daschle needs to go. It may not be a big deal now, but it will hurt, if not, destroy the Dems in 2010 and Obama's (re)run in 2012. I'm sure there are more qualified persons than him. I understand Obama feels he owes Daschle political points for his support, but it's not worth it. There is too much at stack, and we need someone who can actually get universal health-care moving against an increasingly stubborn senate.
February 2, 2009 2:55 PM | Reply | Permalink
It get uglier and uglier. First, the taxes, then he lobbies for the health care industry, then his glamor-star second wife lobbies the defense industry.
Three strikes!! You're out, Daschle.
He'll probably get in anyway because this is how our country is run. Here is how our country is run: corporations,military industries,etc. pay politicians/lobbyists to do their bidding.
February 2, 2009 3:04 PM | Reply | Permalink
I'm neutral on how good Daschle would be in the H&HS position, but these tax and consulting items wouldn't be the tipping point for me.
February 2, 2009 3:06 PM | Reply | Permalink
Lots of simplistic conclusions here. It's the employer who is supposed to report a benefit like this one on a 1099 or its equivalent. I think that pretty much matches up with Inter Alia not reporting the $80+ grand. It's carelessness on the part of the accountants that this company had.
I don't view any of this as more than an embarassment--certainly not enough to derail the appointment.
Obama certainly understands just how much interest gruops have derailed--for decades--changes we need in our country. This is just the latest example of a powerful healthcare industry setting up an opponent for failure. There's no reason for liberals and progressives to do the work of the interest group.
Confirm Daschle and let's get to work on the healthcare system in this country.
February 2, 2009 3:17 PM | Reply | Permalink
Greenwald has the full scoop on Daschle:
http://www.salon.com/opinion/greenwald/2009/02/01/daschle/index.html
A very important point he makes (quoting Matt Stoller) is that Daschle defended Obabama's cave-in on FISA as wise and pragmatic.
February 2, 2009 3:40 PM | Reply | Permalink
So are you saying that if the income wasn't reported Daschle had no obligation to pay taxes on it? Or am I putting words in your mouth. Cause it sure seems like you're laying it all on Inter Alia.
As far as a guy who's been a lobbyist for the health insurance companies being the one to fix the system, get real. The insurers have NO place at the table and neither does Tom.
February 2, 2009 4:34 PM | Reply | Permalink
I'm guessing Daschle will leave because "he doesn't want to be a distraction to the President" or some such nonsense. I believe Obama's declaration of support is a subterfuge.
Daschle was a rotten pick (although I wouldn't go so far as to add an 'r' into that word) in the first place due to his lobbying income. I can't imagine he would be open to non-private-insurer based health care - what would he do for his millions once he left office?
February 2, 2009 3:24 PM | Reply | Permalink
Where's the outrage, TPM? This guy stinks to high heaven.
February 2, 2009 3:43 PM | Reply | Permalink
I don't like Daschle and never did. But as a consultant myself, I have to say that I don't find these tax matters persuasive evidence of sin. When you are consulting, you're not drawing a paycheck. His checks almost certainly went through his accountant and into the bank. The checks came from various parties at various times. It's easy to make assumptions about how they are being handled and indeed, to not even think about these matters at all.
I'm guilty of that, and I make less in a year than he is making in a month. I get an allowance from my accountant (aka my "wife") and that is pretty much as close as I get to the money. The only time I ever think about money is when I check my account balance and it's lacking the wherewithal to do something I want to do.
I think a stronger case could be made that his accountant was negligent in not ascertaining the nature of his perqs and imbursements and properly advising him of what constituted income.
I won't be particularly sorry if he exits the scene, but this particular brouhaha is pretty weak tea.
Thanks.
mp
February 2, 2009 3:47 PM | Reply | Permalink
A quarter of a million dollars in unclaimed benefits is not weak tea in any sense of the word. This man is a former Senator who is up for a cabinet position. Please don't try to excuse his incompetence because you don't look at your own finances. Try using that excuse on an IRS agent and you'll be at best slapped with penalties and, at worst, tossed in jail for tax evasion.
February 2, 2009 4:54 PM | Reply | Permalink
Is there some reason other than friendship that they are backing Daschle? It sounds like good old boys standing up for one of their own, an image Obama should avoid.
It always seemed that Daschle's couldn't actually make things happen, as if he sidestepped conflict and never made the hard choices. Why are his insurance connections supposed to be qualifications for this post? I would like to see Obama recruit Oregon's previous governor, Dr John Kitzhaber, the man who designed the Oregon Health Plan. He is brilliant, honorable, and pays his taxes.
February 2, 2009 3:55 PM | Reply | Permalink
HOw do you know if he pays his taxes. We find out that lot's of people make mistakes when the fine teeth of the comb are fine enough. Or are you his accountant?
February 2, 2009 4:22 PM | Reply | Permalink
High-income people (and more particularly their accountants) get it wrong on their taxes all the time, and amended returns are commonplace. I'm with Zachary Roth on this one--the bigger issue probably is that he was getting paid by insurers, not that he underreported what he was paid.
February 2, 2009 3:57 PM | Reply | Permalink
The guy has a very sloppy accountant. Amending a 2007 tax return in Jan of 2009 is not a crime, here. You get 3 years to amend tax returns for exactly the kind of slip-ups as these. And determining which services you get that should be included as income are the kind of things accountants screw up on all the time.
The problem with having such a scrutinizable record of doing this kind of b.s. is that it makes you a) a bad judge of advisors, because an accountant is an advisor and b) makes you a poor administrator because you are responsible for these screwups with or without an accountant. Frankly I think the money he got for speeches and the $5,000 in advisement to insurers shows he is an expert doing his thing in the area of his expertise. It's all disclosed.
February 2, 2009 4:04 PM | Reply | Permalink
The money he got for speeches is corrupting why? He was paid to give a speech to HIPA. What did he say in that speech. You guys are great and I really hope no one passes health care reform anytime soon? really. have you read his book. He is quite explicit the role they played in helping derail a policy goal that he professes is near and dear to his heart.
And since when is getting policy advice the same as lobbying. it is not.
This whole thread is along exercise in questioning someone's and drawing all the wrong conclusions.
February 2, 2009 4:27 PM | Reply | Permalink
Well crap I messed up my own punchline. I meant to say:
This thread is about questioning someone's motives and drawing all the wrong conclusions.
Some people think he was intentionally trying to evade paying taxes which as we know is a crime. That's just ridiculous. There is no evidence of that zero. nada. The truth is many many high income people's tax forms would have to be amended if they were scrutinized to this degree. The reason this is not a problem for 90% of taxpayers is they have no where near the complex mix of income (cash and in-kind) as he does.
The second conclusion we are supposed to draw from this list is that he is somehow corruptly influenced by the health insurance industry because he took money for speeches not that he took money to lobby on there behalf). Again this is stupid nonsense. He is very explicit about the role of insurance companies in increasing cost, limiting access to coverage and blocking effort after effort at reform.
Either a president has wide latitude to pick his team or he does not. It is one of the sorriest facts of modern political life that we think the witch hunt to find something embarrassing about a nominee is somehow a productive use of our energy. it is not. mostly it is a purely political tit for tat that doesn't have one thing to do with making good policy or improving the lives of Americans. The application of the purity test whether an instrument of the political right or left is part and parcel of the dysfunction of our governement.
I have no idea if Daschle will be a good manager of a huge agency, but if he is the guy Obama wants to push one of the centerpieces of his policy agenda then more power to him.
February 2, 2009 4:41 PM | Reply | Permalink
Daschle must go, the sooner, the better. The lobbying is the worst of it, along with the weenie effect. Go, Tom, go! For the good of us all.
February 2, 2009 4:20 PM | Reply | Permalink
one more thing....the rich don't like paying taxes, they cheat.. they lie, they steal--twas ever thus.
Rome went down the tubes because the rich wouldn't pay taxes, they wouldn't serve in the army and they were incompetent as rulers. (sound familiar?)
Me? I with Jefferson, revolution every 20 years...
February 2, 2009 6:03 PM | Reply | Permalink
Daschle has become part of the swinging door corrupt, get rich, Washington establishment.
February 2, 2009 6:04 PM | Reply | Permalink
Sloppy? It took the accountant six months to determine whether the limousine was taxable income? How about incompetent? Either that, or Daschle is lying, because that is the sort of thing that is cut and dried. If Daschle asked the accountant about it six months ago, the accountant should have answered back immediately that yes, it is taxable income and he needed to file an amended return right away.
February 2, 2009 7:48 PM | Reply | Permalink
Sorry, but I think Obama needs to dump Daschle -- and quick. He (Obama) is undermining his own promise of bringing a new culture to Washington. It's as if his administration is saying we're holding people to new standards of accountablity and we're not going to have a revolving door for lobbyists -- except when we're not and when we do. I could overlook the Geithner stuff because I was convinced he was the only man who could do the job -- but I'm not so willing to overlook Dashle's mistakes.
February 2, 2009 8:18 PM | Reply | Permalink
I can't believe it. Rot in our fair party?
Tough luck, Tom. You need to step down. Of course, you have had your day.
Glad it's past.
February 2, 2009 10:35 PM | Reply | Permalink
Having worked for a wealthy person and in that environment, I found that most in that tax bracket actually lose sleep worrying that they didn't pay all their taxes. They are terrified of the IRS because they could lose everything from the penalties and interest. So the question is, do you think Daschle was willing to put everything he has on the line to save $100 K? My experience says no way. But unfortunately I do think all this tax mess is hurting Obama's message of change in D.C. Daschle should put country first and pull out.
February 3, 2009 12:15 AM | Reply | Permalink
I believe he is genuinely offended by the way our health care system ruins the lives of countless Americans--and genuinely committed to solving that problem, regardless of which special interests that solution may offend.
not enough, apparently, to prevent himi taking a big chunk of change from 'em...
these folks don't buy unless somebody's selling...
February 3, 2009 3:49 PM | Reply | Permalink