Taking Stock Of The Daschle Charges

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February 2, 2009 7:58 a.m.
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Tom Daschle’s nomination to be Secretary of Health and Human Services has hit a serious snag, in the wake of a string of revelations mostly related to his payment of taxes on income he received as part of his consulting activities since he left the Senate in 2004.

Looking at a range of news reports, there are several different charges out there, each of varying degrees of seriousness. So — leaving aside the real-world question of which of these charges might be the most politically damaging to Daschle’s nomination — it’s worth taking stock of what exactly the former Senate leader stand accused of. And of how, at least initially, might we rate the seriousness of each individual misdeed.

Let’s run down the list:

1. The most serious charge — which comes from a report conducted for the Senate Finance committee, which is handling Daschle’s nomination — is that from 2005 to 2007, he failed to report on his taxes income from the use of a limousine and driver totaling over $255,000, and provided by InterMedia Advisors LLP, a private-equity firm. On January 2, Daschle, having concluded that he owed the money, filed amended returns and paid more than $140,000 in back taxes and interest.

InterMedia, whose advisory board Daschle chairs, was founded in 2005 by Leo Hindery, a politically connected media and telecommunications executive (with an apparent record of embellishing his personal story). Hindery gave at least $42,000 to Mr. Daschle from 1997 to 2004.

Daschle told the committee that he realized last June that the limo service might count as taxable income, and asked his accountant to look into it. A Daschle spokeswoman said the accountant didn’t come back to Daschle until late December or early January with a finding that the taxes were owed. Only then did Daschle inform the Obama transition team. “He thought his accountant was taking care of it,” the spokeswoman told a reporter.

2. The Finance committee is also probing a second potential tax impropriety stemming from Daschle’s relationship with InterMedia. The committee says he failed to report on his 2007 tax return consulting income from the company of $83,333.

But this one appears to be an oversight, if a careless one. According to the committee report, Daschle received that sum per month (or a $1 million a year) from InterMedia under the consulting arrangement. InterMedia left off one monthly payment — the one for May 2007 — from the annual statement of income it sent Daschle. The error occurred because the InterMedia staffer normally responsible for reporting such payments was on maternity leave, according to the committee. All the other months were accounted for.

3. The issue that almost certainly has the greatest relevance for Daschle’s desired new job as HHS Secretary is his work on behalf of healthcare-industry interests.

In his financial disclosure statement, Daschle reported getting paid more than $390,000 for giving speeches to groups including America’s Health Insurance Plans (AHIP), a trade organization representing health insurers. He also got nearly $100,000 from health-related companies affected by federal regulation, including more than $5000 (again, the exact figure wasn’t reported) for giving “policy advice” to the insurer UnitedHealth.

4. The committee is also probing Daschle’s ties to Educap — a student loan company that paid Daschle over $5,000 for “policy advice,” according to his financial disclosure report. (The exact amount wasn’t disclosed).

The inquiry is focused on whether “travel and entertainment services” given to Daschle by Educap and several related entities should have been reported as income. At issue, it appears, are two trips Daschle took on EduCap’s corporate jet, one to the Bahamas, the other to the Middle East, to speak with members of the board of directors of a related organization. On the latter trip, Daschle and his traveling companions met with King Abdullah of Jordan, and Israeli minister Ehud Barack, according to the Daschle spokeswoman.

In addition, Daschle has worked during the last few years for Alston & Bird, the high-powered DC law and lobbying firm, which was registered as a lobbyist for EduCap. Some on the committee have suggested that Daschle should himself have registered as a lobbyist for Educap.

So what should we make of all this?

Individually, each charge — with the exception, perhaps of the until-recently-unpaid taxes on the InterMedia car and driver — might be seen as not much more than business as usual for a former Congressional leader who has slipped through Washington’s revolving door to offer his contacts and expertise to private interests. But cumulatively, they paint a picture of a Washington insider who, at best, has grown negligent about tracking the various forms of compensation he’s receiving.

Perhaps more important, Daschle’s coziness with corporate interests, many of whom will have key business before Congress and the Obama administration, could complicate the larger task of reducing the influence of the private sector in Washington.

For instance, there’s nothing explicitly nefarious about Daschle’s work on behalf of health insurers. But interests like AHIP and UnitedHealth have, by and large, stood in the way of efforts to remove our healthcare system from the grip of private interests, which many see as a prerequisite for real reform. Of course, that likely won’t happen without at least neutralizing the opposition of the private insurers — so perhaps Daschle’s ties to those insurers make him ideally suited for the role. But at the very least, it would be nice to know what kind of “policy advice” he gave his corporate clients.

Late Update: One additional angle we might have noted. The Finance committee report also found that, from 2005 to 2007, Daschle overstated the deductions to which he was entitled for charitable contributions. When he filed amended returns, he reduced the deductions by almost $15,000.

Late Late Update: Jonathan Cohn of The New Republic adds his well-informed and somewhat more favorable take on Daschle’s ability to stand up to private healthcare interests:

On reform, Daschle favors the mainstream Democratic position, which relies primarily on private insurance to deliver coverage–although it also calls for creating a new public plan, into which anybody could enroll. That would put him a bit to my right, insofar as my touting of single-payer as a technically superior–if politically inferior–reform puts me to the mainstream’s left. But Daschle’s philosophy on health care seems, if anything, to be slightly to the left of where I’d expect a politician of his background (ideological, geographical) to be. And it’s exactly where President Obama is, for better or for worse.

What’s more, Daschle is very bullish on scrutinizing new treatments for their cost-effectiveness, an idea that the drug and device industries oppose strongly. He’s also proposed heavy regulation of the insurance industry and been explicit about the public plan, two positions that don’t go over particularly well with most insurers (or many other corporate interest groups, for that matter). Finally, having both heard and read Daschle on many occasions, I believe he is genuinely offended by the way our health care system ruins the lives of countless Americans–and genuinely committed to solving that problem, regardless of which special interests that solution may offend.

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