The Internal Revenue Service should hope as many big-time Democrats get appointments to the Obama cabinet as possible. It has become the most efficacious way to get them to pay their taxes.
Tom Daschle, President Barack Obama’s nominee for secretary of Health and Human Services, is the latest Obama nominee forced into the “pay-to-play” rules of Senate confirmation: He’s paid his back taxes to the tune of $146,000, apologized profusely and expects to get Senate approval on the precedent set by Treasury Secretary Timothy Geithner.
Geithner blatantly cheated on his taxes. He worked at the International Monetary Fund, which reimbursed him for self-employment taxes he didn’t pay. After an IRS audit, he paid up for 2004 and 2003, but not 2001 and 2002. For those years, the statute of limitations had expired. He didn’t write the IRS a check for the remaining $25,970 until nominated as Treasury secretary. He “paid to play,” and the Senate confirmed him in an update of an old Soviet joke: “You pretend to be sorry, we pretend to believe you.”
Geithner’s nomination was deemed “too big to fail.” If Daschle gets the same treatment, it will mean whoever Obama wants for a given position is ipso facto too important to be expected to abide by the tax laws. Daschle, the former Senate majority leader, has no management experience to prepare him for running a 60,000-person department and has no greater expertise in health care–he’s co-authored a book on the subject–than any number of other possible nominees.
Daschle is exceptional only insofar as he’s such a perfect representation of the Beltway culture of easy enrichment for former officeholders. With a wife who is a Washington superlobbyist, he’s an example of why you’ll be hard-pressed to meet a poor ex–U.S. senator. Influence and access are the family business. After getting booted from office, Daschle became chairman of an investment firm that paid him $1 million a year. During the past two years, he’s made more than $5 million altogether, including millions for quasi-lobbying work.
The head of the investment firm gave Daschle free use of his Cadillac and driver. The guileless former South Dakota senator thought the car service was “nothing more than a generous offer from a friend,” a Daschle spokesman said. Daschle himself reportedly explained to Senate staffers that he had grown so used to getting chauffeured about town as majority leader he didn’t think there was anything unusual about getting driven everywhere in someone else’s car. Limousine liberalism meets senatorial entitlement.
And so he neglected to consider that he might have to pay taxes on a service worth more than $250,000. Until, that is, Obama sewed up the Democratic nomination last June. Daschle then made inquiries with his accountant. He didn’t inform the Obama team of the problem until after Obama nominated him to HHS.
Unreported consulting fees and questionable charitable donations brought Daschle’s unpaid taxes to $146,000, including interest and penalties. That meant Daschle had accumulated an unpaid tax liability that was more than four times the annual median income of an individual in the United States. Not bad work for a self-styled “prairie populist.” The New York Times reported that Democrats were baffled at how “a Washington insider with a reputation as a sophisticated thinker could have made such a mistake.” Where’s their favorite word, “greed,” when they need it?
Democrats have the votes to muscle Daschle through, but they may come to regret it. Geithner’s and Daschle’s tax sins send a corrosive message that we have a two-tiered tax system divided not between the rich and the poor, but between the politically connected and everyone else. For the insiders, failure to pay is a forgivable offense, cause for only for tut-tutting on the way to high office. Everyone else is expected to pay, and countless millions will eventually pay more in the new “responsibility era” that Obama doesn’t deign to apply to his own nominees.