In acknowledging he'd "screwed up" Tuesday, President Obama appears to have learned an important lesson: He can't pledge to bring ethical change to Washington and then make exceptions whenever it's convenient. The withdrawal Tuesday of former Sen. Tom Daschle as Obama's nominee for Health and Human Services secretary was necessary and overdue. Like Treasury Secretary Timothy Geithner before him, Daschle was well qualified. But his lapse of judgment on one of the fundamental expectations of all of Americans — to voluntarily comply with tax laws — tarnished his candidacy and threatened the integrity of the new administration. Obama took the blame and pledged, "It's important for this administration to send a message that there aren't two sets of rules — you know, one for prominent people and one for ordinary folks who have to pay their taxes."
The disclosure that Daschle failed to pay $128,000 in taxes came just weeks after the administration brushed aside a smaller tax problem that hounded, but did not derail, Geithner's confirmation. In both cases, the administration tried to paint the unpaid taxes as honest mistakes by good men uniquely qualified for their posts. Indeed, the former three-term South Dakota senator was seen by many as the ideal person to take on the monumental task of health care reform. Daschle has co-written a book on the issue and knows how to navigate Congress. But like Geithner, Daschle didn't pay his tax bill until he was under consideration for a Cabinet position.
Daschle, after losing re-election in 2004, easily moved into the surreal world where government meets industry. He didn't lobby, but he parlayed his Senate experience into a new career where he earned $5 million from legal and lobbying firms, a private equity group and by giving speeches. Along the way he used a private car offered by a friend and colleague at the private equity firm, InterMedia Advisors. He used it so much, in fact, his accountant finally determined he owed $128,000 plus interest to the Internal Revenue Service.
But Daschle didn't pay the bill until Obama's team flagged the problem. That is the difference between an honest mistake and willful noncompliance. Daschle apologized, but it rang hollow. Despite spending 18 years in the Senate deciding how to spend tax dollars, he wasn't willing to pay his share to the public purse.
Daschle's decision to step down came shortly after Nancy Killefer, a little-known nominee for the new job of chief performance officer, stepped aside because of her own tax issue. She had failed to pay District of Columbia unemployment taxes on her household help in 2005 — though she resolved the matter within five months. Her bill was about $950. Daschle, whose tax evasion was 128 times that, couldn't well stick around after that.
But the real lesson here is for Obama, who stood first by Geithner and then Daschle, saying they made honest mistakes. That would be believable if either man had paid their taxes when they realized their error. But they didn't, creating a blemish that can't be removed. Surely there is at least one person in this country who can lead the overhaul of the health care system who doesn't have a tax problem.