With Daschle's withdrawal, can Obama repair image as ‘change’ agent?

The nominee for secretary of Health and Human Services bowed out Tuesday over tax missteps, as did another Obama pick.

WASHINGTON – It was the worst day yet in Barack Obama’s young presidency: two failed high-level appointments, one of them a close confidant, Tom Daschle, whom he had nominated for Health and Human Services secretary and White House health czar.

By the end of Tuesday, President Obama had placed the focus squarely on himself. “I screwed up,” he told network television. But the image, just a day earlier, of Obama strongly defending a cabinet nominee who was caught owing $128,000 in back taxes will be hard to erase.

“Obama has work to do to restore his image as an agent of change,” says Julian Zelizer, a congressional historian at Princeton University in New Jersey.

The demise of Mr. Daschle’s nomination demonstrates the challenge a new president faces in staffing his administration with people who know the ways of Washington and can hit the ground running but aren’t tainted by their associations. As a former Senate majority leader, Daschle stood to make a lot of money through his connections – and he did. Questions had also been raised about speaking fees he had received from healthcare groups, a potential conflict of interest, as he prepared Obama’s initiative to reform the system.

The Daschle brouhaha grew especially toxic because it was one of a series: first, the withdrawal of Commerce secretary nominee Bill Richardson, over an investigation into political donations; Treasury secretary Tim Geithner’s own tax delinquency, which he survived; and Nancy Killefer’s withdrawal, two hours before Daschle’s, as chief White House performance officer, again over unpaid taxes.

Obama acknowledged in his interview with NBC News that there can’t be two sets of rules, “you know, one for prominent people and one for ordinary folks who have to pay their taxes.”
Some analysts suggested that perhaps Obama had set standards that were too high, but Obama has made clear he intends to press ahead with his inaugural promise of a “new era of responsibility.”

If Obama had kept trying to muscle through Daschle’s nomination in the Senate, it would have undermined his efforts at economic stimulus and reform. On Wednesday, Obama and Mr. Geithner announced that they will limit the pay of executives from companies that received federal bailout money.

At the regular afternoon briefing, White House press secretary Robert Gibbs tried to control the damage, but his unwillingness to look back at where these personnel choices went awry left reporters frustrated.

“The president has confidence in the process,” Mr. Gibbs said several times, while acknowledging that the president “takes responsibility” for the series of personnel snags.

The news about Mr. Daschle and Ms. Killefer drowned out the other news of the day: Obama’s choice of a new Commerce secretary, Sen. Judd Gregg (R) of New Hampshire. Senator Gregg’s selection, if confirmed by the Senate, will mean three Republicans in his cabinet – the most by an opposition party since the Franklin Roosevelt administration.

Bipartisanship has been another watchword of the Obama administration, but Gregg’s selection becomes a footnote on the day. Gov. John Lynch (D) of New Hampshire appointed a Republican – Bonnie Newman, a former aide to Gregg – to replace the Commerce nominee in the Senate. Gregg had made it clear he would not take the job if he was going to be replaced by a Democrat – potentially handing the Democrats a 60-vote filibuster-proof majority in the Senate.

Not asked to drop out

At his briefing, Gibbs asserted repeatedly that both Daschle and Killefer withdrew their names and were not asked to drop out. That raised questions about why Obama would want to keep top officials with tainted ethical profiles. Obama affirmed his support of Daschle as recently as Monday, saying he backed him “absolutely.”

The loss of Daschle’s expertise on the American healthcare system and his background as the former Senate majority leader was seen as a blow to the Obama administration, which is planning a major healthcare reform initiative. Still, his work at a Washington law firm for various clients – including those in healthcare – raised questions about appearances. Daschle is not a registered lobbyist, but his work, and its potential conflicts of interest, would have been an area of inquiry in his confirmation hearings.

After 25 years in the Congress, including 10 years as Senate Democratic leader, Daschle remained popular on Capitol Hill. Several hours after he withdrew his nomination, the reigning wisdom inside the Beltway was that Daschle may well have survived the confirmation process. He had apologized profusely for the tax oversight, which he called an embarrassment, and paid what he owed, including interest and penalties.

“Tom Daschle is as honest and decent and honorable as any human being I’ve ever known,” said Sen. Kent Conrad (D) of North Dakota, before a closed meeting with the Senate Finance Committee on the Daschle nomination on Monday.

But the intense controversy around tax issues was taking a toll both on supporters and on the nominee. As Daschle rounded the corridor to the Finance panel meeting to face a wall of cameras and reporters, he flushed deep red.

After the meeting, Democrats on the Finance panel publicly defended his nomination, but acknowledged that winning confirmation would not be easy.Republicans said the confirmation fight would have cost the president, especially in the wake of a Jan. 26 vote for Treasury Secretary Geithner. Thirty-four senators, including three Democrats and an Independent who caucuses with the Democrats, voted against that confirmation.

“He saved the president from a big embarrassment at the confirmation hearing next week,” said Sen. John Ensign (R) of Nevada, after Daschle’s withdrawal Tuesday.

A loss for healthcare reform?

Many advocates for healthcare reform believe Senator Daschle’s withdrawal is a loss.

“We are saddened,” says Joel Miller, a senior vice president of the National Coalition on Health Care, a Washington-based advocacy organization. “Daschle was a real advocate for urgent action on healthcare reform and understood that things could get incredibly worse if we don’t take action this year to address the uninsured problem and rising healthcare costs.”

Mr. Miller and other advocates had hoped that Daschle could continue as head of the White House Office for Health Reform. During his press conference, Gibbs said Daschle had withdrawn from that appointment as well. But Daschle’s decision will not “slow down” the White House’s effort to reform the healthcare system, Gibbs insisted.

“The job of ensuring healthcare reform will outlast any person nominated for the secretary of HHS and likely anybody that serves in this administration,” says Gibbs. “There are many people in this administration that are working on this issue right now. We are looking for a new nominee…. The work toward a solution to make healthcare more affordable won’t stop or pause while we look for that nominee.”

But Daschle’s decision will at least cause a “bump in the road,” says Robert Blendon, director of the Harvard Program on Public Opinion and Health and Social Policy in Cambridge, Mass. However, he adds, it may help Obama with his larger agenda in the long run.

“The controversy had reached a level where it would have made it more difficult for Senator Daschle to really play the critical point person both of them had hoped he could,” says Dr. Blendon. “In an economic downturn where people are threatened about losing their jobs and homes,… there’s a real sensitivity to wanting people in public life who don’t in any way have advantages that we wouldn’t have.”

The challenge for Obama now is to move quickly to appoint a new secretary of Health and Human Services who has “the unquestioned commitment to healthcare reform that he does,” says Ron Pollack, the president of Families USA, one of the nation’s largest healthcare reform organizations. Several names have come up, including former Vermont Gov. Howard Dean (D), a physician who managed to get more than 95 percent of Vermont’s children covered by healthcare during his six terms in office. There has, however, been tension between the Obama and Dean circles.

Another, less well-known contender is Kansas Gov. Kathleen Sebelius (D). Before becoming governor, she was the president of the National Association of Insurance Commissioners. She was also appointed by President Bill Clinton to the task force that developed the Patient’s Bill of Rights.

“There’s no governor in the country who knows more about healthcare and healthcare reform than she does and she’s very close to the president,” says Mr. Pollack. “So it’s not like there will be a void for a significant period of time.”