Daschle returning to Senate to defend his reputation

Confirmation stalled amid tax questions

A BIG 'SURPRISE' Daschle's prospects became complicated during the first week of the year, when he detailed a series of tax errors.

WASHINGTON - After a quarter-century in Congress, Tom Daschle will return to Capitol Hill today in an unfamiliar role, summoned by former colleagues on the Senate Finance Committee to defend his reputation and his nomination to be health and human services secretary amid revelations that he did not pay more than $100,000 in back taxes.

Well known and generally well liked in Washington, Daschle was expected to be one of President Obama's first Cabinet secretaries to be confirmed. His preliminary hearing before the Senate Health, Education, Labor and Pensions Committee was so upbeat that Republicans praised his selection.

Instead, a vote on his confirmation has been stalled and with it one of Obama's signature domestic policy issues - healthcare reform.

Daschle's prospects became complicated during the first week of the year, when he detailed for the White House and the Finance Committee a series of tax errors made over the past three years. Most significantly, he did not pay taxes on a luxury car and driver provided by his friend and employer, Democratic businessman Leo Hindery Jr.

Daschle, a former Senate majority leader from South Dakota, will head to the Capitol "ready and willing to answer any questions," said Jenny Backus, his spokeswoman. He will also inform lawmakers that in addition to the $140,000 in back taxes and interest he paid on Jan. 2, he intends to send the US Treasury an additional $6,000 to cover Medicare taxes on the driver.

Questions about the Medicare tax liability arose only Friday, Backus said, and Daschle agreed to pay the money.

Daschle, who has been out of town visiting an ailing brother, has been unavailable for interviews. He has not responded to requests to release his tax returns.

Many Democrats rose to his defense yesterday.

"If all you knew about Tom Daschle was that he used to be a senator and he made a mistake and had to pay over $100,000 in back taxes, you would have a right to be skeptical, even cynical," said Senator Richard Durbin, Democrat of Illinois. "But if you know Tom Daschle, you know better."

Another Democrat, Senator John F. Kerry of Massachusetts, brushed aside concerns that Daschle's nomination was in jeopardy. "It's obviously a mistake. But I think it's an innocent mistake. I don't think it affects one iota his ability to do the job," Kerry said on NBC's "Meet the Press."

One longtime friend blamed Hindery's company, InterMedia Advisors, for the tax oversight. Daschle did report the $1 million annual consulting fee he received from the private equity firm. But Daschle, who entered the private sector in 2005, did not realize until last summer that the Internal Revenue Service considers the free car and driver compensation, Washington lawyer Frederick Graefe said.

"If there was no 1099 [form] from his employer for the car and driver, how was he to know it was taxable?" Graefe said. "His integrity is beyond reproach."

Senator Jim DeMint, Republican of South Carolina, one of two Republicans who opposed the confirmation of Secretary of State Hillary Clinton, was the only lawmaker to suggest publicly that Daschle's nomination may be in jeopardy. "It may be. I want to find out more about it," he said yesterday on ABC's "This Week." "It's disheartening, obviously."

Several other Republicans held back, saying they are awaiting action by the Finance Committee, which must vote on the nomination before it goes to the full Senate. Senate Minority Leader Mitch McConnell, Republican of Kentucky, said on CBS's "Face the Nation": "I think I'm going to just wait until [committee members] give me their opinion. But it was a surprise."