It was the late hotel magnate Leona Helmsley who uttered the immortal words, "We don't pay taxes; only the little people pay taxes."
Helmsley apparently has been reincarnated in the persons of now Treasury Secretary Timothy Geithner and President Obama's choice to head the Department of Health and Human Services, former Senate Majority Leader Thomas A. Daschle.
Geithner "forgot" to pay "only" $43,000 in back taxes and penalties. He paid the IRS shortly before his confirmation hearings when the "oversight" was brought to his attention.
Daschle stiffed the IRS for $128,000 (plus $12,000 interest and penalties), paying up just six days before his first Senate confirmation hearing. (He agreed to a Senate Finance Committee request to pay an additional $6,000 in Medicare on additional income related to a car and driver. More about that in a moment.) According to The Washington Post, Daschle waited nearly a month after his nomination before telling Barack Obama of his tax tardiness.
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Daschle's rationale again exposes what is wrong with Washington. Recall President Obama's vow to "change the culture of Washington." With Geithner and Daschle (and prior to them, New Mexico Governor Bill Richardson, who withdrew his nomination for commerce secretary under pressure of a federal investigation into how his political donors landed a lucrative transportation contract), we are still waiting for "change we can believe in."
When Daschle was Senate majority leader, one of his perks was a car and driver paid for by taxpayers. When he lost his re-election bid in 2004, Daschle was given a car and driver by the head of a private equity firm headed by entrepreneur and longtime Democratic Party donor, Leo J. Hindery Jr., according to The Washington Post, which cites a confidential draft report prepared by Senate Finance Committee staff.
Naturally, one who had been squired around when he was a senator and public servant shouldn't be expected to drive himself and search for his own parking spot, or worse, take public transportation. Once someone has enjoyed the power and perks of the Senate, it's difficult to come down to where the "little people" live. Perhaps some counseling would have helped.
Daschle supposedly didn't know that a luxury car service is considered income if provided by someone else. How could he not know since for many years he participated in writing — or at least voting on — tax laws that the rest of us must abide by, or face fines and possibly prison. Daschle also made "questionable" charitable contributions totaling $15,000, according to the finance committee report, which additionally lists unreported consulting fees. Not reporting income raises red flags with the IRS.
It's not that Daschle couldn't afford the taxes. Since leaving office, according to documents filed with the Office of Government Ethics (now there's a contradiction), Daschle earned $2.1 million from the law firm of Alston and Bird and, since he left the Senate in 2005, $1 million a year from Hindery's private equity firm, InterMedia Advisors. He also made money speaking to and serving on the boards of health care organizations he would regulate as HHS secretary.
Does anyone else see a potential conflict of interest? Daschle can claim he's no different from Secretary of State Hillary Clinton, whose husband heads the Clinton Foundation, which has received millions from foreign governments that surely would like to have her (and his) ear when it comes to foreign policy. The new standard appears like the old standard that President Obama decried during the campaign.
When you consider other high-level nominees who have withdrawn over much smaller lapses, such as failing to pay Social Security taxes on nannies and hiring illegal aliens for work on private property, Daschle's problems are more than a "speed bump," as one of his defenders called it. They constitute a large and growing sinkhole for this administration.
Most presidents encounter difficulties with possibly one cabinet nominee or other high-level official, but Obama has had three in less than a month.
If other nominees were forced to withdraw for lesser offenses, allowing Daschle's nomination to proceed sends a message the Obama administration promised to change: only the little people pay taxes. Daschle should withdraw his nomination and if he won't, Obama should withdraw it for him and find someone more ethically qualified who doesn't treat taxpaying (and other taxpayers) so cavalierly.
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