It is not easy to lose control of your central economic initiative (the stimulus) and compromise your central domestic initiative (health care) in one day. Obama ended up declaring that he had "screwed up" before the central thesis of his administration (change we can believe in) went down with it.
It did not make a lot of sense. Tuesday began with former McKinsey partner Nancy Killefer withdrawing her nomination to be Chief Performance Officer for the federal government because of the political distraction caused by her failure to pay $900 in local unemployment taxes on her household help. This was especially odd, since Killefer's job did not even require Senate confirmation. A few hours later, former Senate Majority Leader and Secretary of HHS nominee Tom Daschle dealt a blow to Obama's health care agenda when he withdrew his nomination over his failure to pay taxes.
Part of this is Clinton-style ethics pandering. Presidents who loudly insist on bright ethical lines inevitably lose credibility. Presidents simply nominate too many people with too much history and shades of gray. Besides, Americans will judge Obama on whether he got the job done -- not on the moral purity of his appointees.
Within minutes of taking the oath, Obama signed an order declaring that nobody who has lobbied within the past two years can serve in his administration. I understand the problem, but why should a Sierra Club lobbyists who spent a decade fighting pollution be barred from helping lead the EPA? Obama would have accomplished more by closing the back door, not the front: his rule against leaving government to become a lobbyist makes more sense (if you can enforce it).
Reality intervened immediately. Defense Secretary Bob Gates interviewed a bunch of people for Deputy Secretary -- one of the most powerful positions in Washington. He chose William Lynn, who had recently lobbied for Raytheon. Obama did the right thing -- he gave him a pass. It won't be the last one.
Having set a silly standard, Obama felt forced to disqualify Nancy Killefer, a highly qualified nomination. (I knew Killefer but did not work with her at McKinsey). Killifer has made a study of productivity improvements in government operations around the world other countries and published some very good writing on the subject. The odds that she would make a big difference in federal government performance are vanishingly small, but it was still a solid nomination. (Had the Senate wanted to punish her for not paying nanny taxes, confirmation would have been the appropriate penalty).
The Secretary of HHS needs to know something about health care reform and a lot about getting legislation through the US Senate. Tom Daschle knows both more about health care than any Senator and more about the US Senate than any health care expert. He is a mentor to the President and wrote a book on health care reform applauded by Republicans and Democrats alike. He was a logical and strong choice.
The withdrawal of his nomination was strange. Many Senators were shocked because he clearly had the votes he needed for confirmation. And the tax issue seemed as modest as Killefer's: Daschle did not pay taxes on a car and driver provided by the company he worked for. Daschle never got a 1099 for it but was liable for taxes on it anyway. But since when is business travel income? Do Senators pay taxes on their limos? If my employer pays for flights or taxis for business travel, I do not expect them to treat it as income to me. (Update: in closed testimony to the Senate Finance Committee, Daschle acknowledged that the car was used 80% for personal use. That changes everything. He also admitted that he had simply not declared $80,000 of consulting income -- very bad. This also calls into deep question how well he was vetted in the first place).
You can make a strong
case that Daschle converted public service to private riches -- but you have an even easier time making this case with HIllary Clinton or, dare we mention it, Barack Obama. Both leveraged celebrity obtained in public office to make millions on their books. Does that make them unfit to serve? Of course not.
Obama now risks being hoist on his own ethical petard. Having won with a narrative of honest, decent Americans struggling against corrupt insiders who are wrecking our institutions, he has a hard time appointing people with even trivial tax issues. The narrative is not bad -- there have been way too many corrupt insiders lately -- but now Obama now has to live with his own symbols even when they are the stuff of myth. Plenty of insiders do not cheat and plenty of every day Americans do.
I became versed in the silly politics of tax "gotchas" being used to hold up Senate confirmations when I had the genuine honor of being named to high office sixteen years ago, Facing confirmation, I learned that I too, had a "nanny problem". I recall the following conversation with the White House handlers in charge of getting me through the Senate:
White House: "People who want to be confirmed by the Unite States Senate, that's who. And almost nobody else, if you want to know the truth".
Me: "Well, I have a babysitter and I have never paid employment taxes on her. And if that's a problem, tell me now. I have no interest at all in embarrassing this president -- not that he seems to need any help from me."
White House: "Very funny. But this could be a problem." (Pause as well-trained legal mind clicks into gear).
White House: "OK, how old is your kid?"
Me: "He is seven months old"
White House: "And how long have you had a nanny"
Me: "About six months"
White House, speaking slowly: "So what you are telling me, Mr. Manley, if I am understanding you correctly, is that you are slightly late with your payroll taxes on your nanny and you plan to correct this situation by, shall we say, this afternoon?"
Me: "Yeah, I guess that's what I was trying to say".
Today was Obama's biggest defeat since Super Tuesday one year ago. He has now played his "I screwed up" card -- and he will have a hard time using it very often. His honeymoon is now over because the other team smells blood. The stimulus -- an ungainly beast on the best of days -- is clearly threatened. If Obama keeps playing touch football against guys playing tackle, we are going to get creamed.
That Killefer and Daschle will not serve their government is a genuine loss to the country. And confirmation rules that keep talented, honest people out of government leadership are not only dumb -- they are dangerous.
