Democrat Former Senator Tom Dashcle (Obama's HHS Sec. Nominee) Has $100,000+ Tax Trouble

Bumps in the Road: Obama's HHS Secretary Nominee Faces Tax Questions Over Car and Driver

ABC News has learned that the nomination of former Senator Majority Leader Tom Daschle, D-S.D., to be President Obama's Secretary of Health and Human Services has hit a traffic snarl on its way through the Senate Finance Committee.

The controversy deals with a car and driver lent to Daschle by a wealthy Democratic friend, a chauffeur service the former senator used for years without declaring it on his taxes.

After being defeated in his 2004 re-election campaign to the Senate, Daschle in 2005 became a consultant and chairman of the Executive Advisory Board at InterMedia Advisors.

Based in New York City, InterMedia Advisors is a private equity firm founded in part by longtime Daschle friend and Democratic fundraiser Leo Hindery,

That same year he began his professional relationship with InterMedia 2005, Daschle began using the services of Hindery's car and driver.

The Cadillac and driver were never part of Daschle's official compensation package at InterMedia but Mr. Daschle -- who as Senate majority leader enjoyed the use of a car and driver at taxpayer expense -- didn't declare their services on his income taxes, as tax laws require.

During the vetting process to become HHS secretary, Daschle corrected the tax violation, voluntarily paying $101,943 in back taxes plus interest, working with his accountant to amend his tax returns for 2005 through 2007.

Daschle reimbursed the IRS $31,462 in taxes and interest for tax year 2005; $35,546 for 2006; and $34,935, for 2007.

The chairman of the Senate Finance Committee, Sen. Max Baucus, D-Mont., has called his colleagues for a private meeting at 5 p.m. ET Monday to discuss these complications surrounding Daschle's nomination.

January 17, 2003
Tom Daschle: Ambitions grounded by his wife’s baggage
laweekly | 01/17/2003 | by Doug Ireland

The national press corps didn’t bother to tell you why Tom Daschle, (then) the Democrats’ Senate leader, decided at the 11th hour not to run for president: he calculated that he couldn’t survive scrutiny of his persistent service to the clients of his wife.

Linda Daschle has been one of the airline industry’s top lobbyists for two decades — when she wasn’t busy running the Federal Aviation Administration (FAA), which explains why, just 11 days after the 9/11 attacks, her husband rushed through the Democratic Senate, which he controlled, the $15 billion bailout for the airline industry, a notorious taxpayer rip-off.

Right after then-Congressman Tom Daschle dumped his first wife for a younger, prettier one, the former Miss Kansas Linda Daschle went to work as chief lobbyist for the Air Transport Association the airline industry’s main lobby; she then became the senior vice president of the American Association of Airport Executives; and these days hangs her hat at the pricey top Washington law/lobby shop Baker, Donelson, Bearman & Caldwell, headed by former GOP Senate leader and ex–Reagan chief of staff Howard Baker — where she peddles influence on behalf of a long list of lucrative aviation clients.

The clients for whom Linda lobbied brought more than $5.86 million into Baker, Donelson in one three-year period, including Northwest Airlines ($870,000 from 1997 through 2001) and American Airlines ($1.26 million in fees). Northwest was already teetering on the edge of bankruptcy even before 9/11. American, which has had six fatal crashes since 1994 (not counting 9/11) and has been repeatedly fined by the FAA for a skein of safety violations, had the reputation as the most unsafe major U.S. carrier.

Yet these two clients of Linda Daschle’s got nearly $1 billion from the airline bailout her husband pushed into law — thanks to which Northwest (which was the second largest contributor to Senator Daschle’s 1998 campaign, and which scooped up $404 million in government cash) actually posted a $19 million profit in the third quarter after the twin-towers attacks. And, as the lone senator to vote against the bailout, Illinois GOPer Peter Fitzgerald, decried, “The only people who got bailed out were the shareholders. The 1 million airline employees were left twisting in the wind.”

So much for the populist noises that occasionally come from Senator Daschle’s mouth.

The Daschles also made sure that the bailout exempted American (which has consistently lobbied against tougher airline safety standards) and other carriers with lousy safety records from any real liability to lawsuits from the families of 9/11 victims.

Moreover, the General Accounting Office found that the airline industry’s representations to Congress to secure the bailout overstated its anticipated losses from 9/11 by as much as $5 billion.

Before 9/11, Senator Daschle pushed through the sleazy deal in the backrooms of Capitol Hill that forced the FAA to buy defective baggage scanners from one of Linda’s other clients, L-3 International (from which Linda’s firm raked in $440,000 in the ’97–’01 period).

Under a provision Linda’s husband had slipped into the 2000 budget for the U.S. Department of Transportation (DOT), the FAA was required to buy one of L-3’s scanners for every one it purchased from the company’s competitors. The L-3 scanners were found to be substandard by DOT’s inspector general; FAA tests of the scanners showed high failure rates; and most have not yet been installed because of their defects (the one at the Dallas–Fort Worth airport — another of Linda’s clients — leaked radiation), which is a major reason DOT says it won’t be able to screen all luggage for explosives for years to come.

In one of those corporate-coddling moves for which the Clinton administration became infamous, President Bubba appointed Linda Daschle deputy administrator of the FAA, putting her in charge of regulating her once-and-future clients; and she wound up running the agency as acting administrator. This, of course, significantly boosted the Daschle family income by hyping the amount Linda could charge her clients when she left government service. She didn’t wait long to cash in.

Example: While running the FAA, she awarded Loral Space Technologies (a major Democratic contributor that figured in the ’96 campaign-finance scandals) a nearly $1 billion contract from the federal government; after Linda passed through the revolving door to Baker, Donelson, Loral paid the lobby shop $740,000 in 2000-2001 for Linda’s services.

When the FAA was pondering making mandatory a criminal-background check for all airport employees, Linda, who was then running the agency, vigorously opposed this common-sense move — echoing the position of the airline-industry lobby that had previously employed her.

A particularly odiferous episode involved charges that the senator and his wife had tried to sabotage safety inspections of an air-charter firm owned by Murl Bellew, a Daschle family friend who taught Tom how to fly. The scandal erupted and triggered an official investigation when a Bellew small plane chartered by the Indian Health Service crashed in North Dakota, killing the pilot and three doctors en route to an Indian-reservation clinic. Forest Service inspectors had been arguing that Bellew’s firm should be banned from getting government contracts because the operation had been unsafe for years.

Senator Daschle obligingly pushed legislation taking the Forest Service out of the business of inspecting small-plane carriers, and senior FAA bureaucrats said Linda had also tried to submarine a proposal to train Forest Service inspectors to conduct FAA investigations. An FAA inspector reported a cover-up: Documents showing the Daschles’ assiduous efforts to minimize inspections of Bellew’s planes were shredded by FAA officials under Linda’s thumb. While an I.G. report failed to find Linda guilty of any lawbreaking, there’s an old saying in Washington: The scandal isn’t what’s illegal, the real scandal is what’s legal.

It’s a sign of how lazy, blinkered and source-coddling the Beltway’s national press corps is when one considers that none of all this made the dissections of the senator’s presidential withdrawal — even though a tough piece by the Washington Monthly’s Stephanie Mencimer in the January 2002 issue laying out much of it was still on newsstands. As she observed, “It doesn’t take Lee Atwater to see how Mrs. Daschle’s professional life might play out in a nasty re-election or presidential campaign: ‘Sen. Daschle’s wife lobbyist for nation’s most dangerous airline,’ or ‘majority leader’s wife lobbied to make airlines less safe.’”

Linda Daschle has tried to pooh-pooh her obvious conflicts of interest as an influence peddler, telling The New York Times last August that the staff members she lobbies “are pretty junior and may or may not know who I am” — a mind-boggling, risible assertion. But her senator/leader husband has always refused to make public his and his wife’s tax returns, despite repeated press requests. As a presidential candidate, Tom Daschle could not have avoided giving the press a look at those returns — which would have spelled out just how much cash Linda brings in from her clients.

And that, children, was the ticking time bomb that would inevitably have exploded if the senator had sought the White House — and is the bottom-line reason he chose not to run.

On June 10, 2003, the New York Times reported on a $20 billion Pentagon plan to lease air refueling tankers from the Boeing Company. The newspaper cited that liberal and conservative groups opposed to the arrangement called it a "sweetheart deal" that must be approved by Congress.

The article pointed out that Boeing has hired lobbyist Linda Daschle, the wife of the Senate Minority Leader Tom Daschle (D-SD) to represent the company.

South Dakota's largest newspaper, the Argus Leader, is not reporting the story. In fact, the Argus Leader never prints a story about the lobbying of Linda Daschle. In recent weeks, Executive Editor Randell Beck has been quoted as saying that this is because the Argus Leader doesn't report on the wives of candidates.

The Argus Leader did write a 1995 editorial critical of Marianne Gingrich, wife of the House Speaker, Republican Newt Gingrich, for taking a position with Israel Export Development Company. The newspaper wrote, "The spouses of U.S. leaders should be held to a high standard: Not only should they avoid impropriety, they should avoid all appearances of impropriety."

In 1990, the South Dakota newspaper published a thirty-six paragraph article about Harriet Pressler, wife of Republican Sen. Larry Pressler that suggested the senator had used his office to help his wife's real estate business. By contrast, the recent purchase of a $2 million Washington, DC home by Sen. Daschle and his wife is mentioned by the paper in only five sentences.

Last week, South Dakota businessman Neal Tapio accused the Argus Leader and its political reporter David Kranz of covering up a long association between the senator and Kranz that goes back 30 years. The Argus Leader has refused to acknowledge or disclose that relationship. Tapio implies that the newspaper's reporting has been skewed in favor of the powerful senator and against his critics.

Linda Daschle's lobbying has long been a source of potential conflict of interest issues. Her firm's clients include American Airlines, a recent recipient of billions in taxpayer funds to keep the company in business. Another client, L-3 International, a manufacturer of baggage screening equipment, won a lucrative contract from the Federal Aviation Administration in 2000.

Mrs. Daschle had been an official with the FAA before joining the lobbying firm of Baker, Donelson, Bearman and Caldwell.

None of this makes it to the pages of the Argus Leader. Even the Daschles' refusal to make their income tax returns public didn't get a notice from the same publication that aggressively pursued Harriet Pressler a decade ago.

When Kranz was with the Mitchell Daily Republic in 1982, he wrote an opinion piece that praised Mr. Daschle for releasing his income tax returns and criticized his opponent Clint Roberts for not doing so. Kranz wrote, "We believe it is the obligation of a candidate to produce the financial health as represented in his federal income tax returns."

Kranz has yet to call for the release of the Daschles' returns that would reveal a combined income estimated at $6 million.

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