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Senate Democrats just emerged from an hour-long meeting to discuss the tax filing errors that have thrown Tom Daschle's nomination as health secretary into disarray. That Daschle's former colleagues are vociferously supporting him is to be expected, but Democrats were surprisingly confident that the former Senate leader would ascend to President Obama's Cabinet.

Sen. Max Baucus (D-MT), powerful chairman of the Finance Committee, gave Daschle his vote of confidence, followed by Sens. John Kerry (D-MA) and Kent Conrad (D-ND). Daschle will have his confirmation hearing before Finance next week.

Other Democratic senators provided silent support in the background, with Republicans apparently sneaking out of the meeting in order to avoid the press.

The pro-Daschle appearance, staged in a corridor outside the Finance Committee's marble-walled hearing room, boasted only one mea culpa -- that of the nominee himself. The Democratic senators were more than happy to point fingers at Leo Hindery, the telecom mogul who paid for Daschle's private car and driver, for not sending the nominee a 1099 form indicating that Daschle would need to declare the "gift from a good friend" (Daschle's phrasing) on his taxes.

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...as Attorney General by a vote of 75-21.

Said Pat Leahy, the chair of the Senate Judicary committe:

[O]f the last four Attorneys General, Eric Holder has the largest 'aye' vote of any of them. I think it is a good sign for the country. It is a good sign for the Department of Justice.

At the center of the issues that have complicated Tom Daschle's nomination to run the Department of Health and Human Services is his relationship with Leo Hindery, the politically connected founder of the private equity firm InterMedia.

Taxes aside, we still don't know much about what Hindery got for the $1 million-a-year consulting fee he paid Daschle. Hindery and his colleagues at InterMedia aren't speaking, and the New York Times reports only that, according to a Daschle spokeswoman, "[i]n addition to lending the prestige of his name, Mr. Daschle traveled to help raise money from investors for Mr. Hindery's new venture".

But whatever Daschle did for his very healthy pay check, his association with Hindery should raise some eyebrows.

Hindery, a media entrepreneur who in 2001 founded the YES Network as the TV home of the New York Yankees, was briefly the CEO of Global Crossing, the upstart fiber-optic carrier whose collapse in late 2001, amid claims that executives had made fraudulent claims about the state of the company's finances, rocked the financial world.

To be clear, Hindery had left by the time of the meltdown, and most accounts place the largest share of the blame for the company's crackup on its founder Gary Winick. But when Hindery left, in October 2000 -- not long after predicting, inaccurately, that the company would be cash-flow positive by early 2002 -- he was definitely in the money. He had negotiated the sale of one of the company's divisions to Exodus Communications, in a deal which netted Hindery himself nearly $250 million.

How? BusinessWeek explained at the time:

Based on his contract with Global Crossing, he'll own 5.5% of the company if there's a change of control -- something that Hindery himself manufactured over the past two months by brokering the deal to Exodus. With a strike price of $54.37 a share, Hindery's stake stands to make him nearly $250 million when Exodus completes its "definitive" deal to buy GlobalCenter.


Not bad work if you can get it. Though when, just over a year later, Global Crossing filed for the seventh-largest bankruptcy in American history, its investors and employees -- who in 2004 received a $325 million settlement stemming from the loss of their pensions and 401ks -- might have been less impressed.

But Hindery wasn't done there. In October 2002, he went to court to force Global Crossing to fork over another $708,000 in back pay and more than $100,000 in rent for an apartment at the Waldorf-Astoria Towers on Park Avenue. Hindery had had the foresight to write into his original Global Crossing contract the stipulation that the firm would keep footing the bill for the rent on his Park Avenue pad through Oct. 3, 2002, and would keep paying him a $1-million-a-year consulting fee through September of that year. A lawyer for Global Crossing's many creditors called the effort "laughable", telling the Wall Street Journal Hindery "can line up with all the other general unsecured creditors."

Change we can believe in!

The Coleman legal team just went through another round of calling aggrieved voters to the witness stand, pleading that their absentee ballots were improperly rejected. And again, they've run into some problems.

The Coleman campaign called Elissa Jackson, a sympathetic mother of a five-month old. During direct examination, Coleman lawyer James Langdon tried to be open about the fact that she found out about her uncounted vote because of a phone call from the Republican Party.

Then came the cross-examination by Franken lawyer Kevin Hamilton, who confirmed that, as with a prior case, the Coleman/GOP people who called her up also asked her who she voted for, and made sure she voted for Coleman. "They didn't send you that affidavit before they got the answer to the question of who you voted for in the Senate race, did they?" asked Hamilton.

"No, they didn't," Jackson replied.

Now remember: During last week's proceedings, the Coleman camp was saying repeatedly that they were not cherry-picking voters, that they didn't know whom the people they're advocating for actually supported, and for all they knew they were helping out Franken-voters. Apparently that wasn't quite 100% true.

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Can President Obama bring his no-drama style to national security? Historically the tensions between State and Defense and the National Security Council have run through every administration in the post-war era in some more than others. It was particularly tense in the first years of Reagan and throughout the Carter White House and most notoriously in the George W. Bush years. The national security adviser is supposed to be the honest broker but often winds up a contentious player in his or her own right. (See Brzezinski, Zbigniew)

Obama though has several things going for him. The first is the high stakes of having important figures with reputations to protect at the State and Pentagon jobs. It's in everybody's interest to make this work: Certainly it is for Hillary Clinton who will be at a party tonite to celebrate her swearing in. Certainly it is for Robert Gates who doesn't want to end his career in government looking like he can't get along with Democrats. And it is certainly in the interest of Gen. James Jones at the NSC who has a reputation for being as genial as he is smart.

Another thing helping Obama: It also helps when people know each other at the staff level. One Clinton veteran noted to me the close ties between Tom Donilon, the number two at the NSC, and Jim Steinberg, number two at State. They worked together in the Warren Christopher State Department. The two remain close and have known each other for decades. Those kinds of friendships can be quite helpful when institutional tensions arise as they undoubtedly well for this president just like his predecessors. I'm told they continue to talk often. That is a good thing for their organizations and for the rest of us.

Looks like a split is developing in the Senate Democratic ranks over the contentious question of using the stimulus bill to give "repatriation" tax benefits to corporations.

The idea is a simple one, though likely to alarm progressives: multinational companies with U.S. headquarters would be given a one-time discounted tax rate of 5.25% -- down from a normal rate of 35% -- if they declare their offshore earnings in this country.

Sens. Barbara Boxer (D-CA) and John Ensign (R-NV) are amassing support to add repatriation to the stimulus bill, and they've got at least a partial vote of confidence from the Senate Democratic No. 3 leader, Chuck Schumer (NY). But two fellow senior Dems, Carl Levin (MI) and Byron Dorgan (ND), are decrying what they call a business "lobbying blitz" to secure repatriation benefits.

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Senator Judd Gregg and New Hampshire's Democratic Gov. John Lynch have both confirmed what has been much discussed over the last several days: Gregg has made it clear that he would only accept an appointment to the Obama Administration if it would not cause the Democrats to gain his Senate seat.

"Senator Gregg has said he would not resign his seat in the U.S. Senate if it changed the balance in the Senate," the governor said in a statement given to the Union Leader. "Based on my discussions, it is clear the White House and Senate leadership understand this as well."

Gregg issued his own statement, making the point even clearer: "I have made it clear to the Senate Leadership on both sides of the aisle and to the governor that I would not leave the Senate if I felt my departure would cause a change in the makeup of the Senate. The Senate Leadership, both Democratic and Republican, and the Governor understand this concern and I appreciate their consideration of this position."

So there you have it. A Democratic governor will appoint a Republican Senator, as a condition of the Republican leaving the seat and creating the vacancy in the first place.

Josh makes a good point today about the dearth of appointments at Treasury. I'm told that major posts are going to get filled in this month and that the Geithner delay accounted for a lot of the subcabinet delay, although Holder seems to have gotten up to speed quickly. Meanwhile, smart additions at the National Economic Council include Michael Froman, a Harvard classmate of Obama's from law school and a former chief of staff to Robert Rubin. Jeremy Stein is also going over there. He's a Harvard economist who has had smart things to say about the bailout.

Remember last week, when Republicans were beating their chests over a Congressional Budget Office report that showed 64% of the money in the House stimulus bill would be spent during the first 18 months after its enactment?

After all, the GOP told us in no uncertain terms, the Obama administration had vowed to spend 75% of the stimulus in 18 months -- so the 64% spend-out rate of the House bill represented total failure.

Given that agita, one wonders how the GOP will respond to the CBO's newest report on the Senate stimulus bill. The budget office found that $694 billion of the bill's total $884 billion cost would be spent during the first 18 months after enactment, or a spend-out rate of 78%.

By the Republicans' own metric, that makes the bill a smashing success! Does that mean you'll promise not to filibuster it, guys?

At the moment, you have to think Tom Daschle is going to pull this out. It's possible that his failure to pay taxes on a limo rides and other benefits he accrued from a New York financier may yet do in his nomination to be Secretary of Health and Human Services. But several things have turned Daschle's way today.

First, he apologized which is a necessary but not sufficent precondition to surviving these things. Second, Max Baucus, the chair of the Senate Finance Committee which has jurisdiction over Daschle's nomination, came out for him despite a history of tension between the two. Third, Obama stood by Daschle--a sentiment echoed by Robert Gibbs at his press conference although Gibbs used the slightly miffed phrase, "a report we heard this weekend," about the Daschle contretemps. Fourth: Silence. The blogs are not on fire--yes, there's Greenwald, I know--but there's not pitchfork mob calling for his head of the size and scope usually needed to kill a nomination. The optics of the thing are terrible but it's not deadly

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