For obvious reasons, this is a topic of great interest in South Dakota, and I have received a lot of notes and comments. First, contrary to what I said in my last post, my SDP colleague Jason did use the words "tax fraud" in the title of one of his several posts on the Daschle tax story. I could say that this was not quite an accusation, but I won't weasel out. I concede the point, with apologies, to Professor Newquist, Lisa, and AI. It was SDP and not David Newquist who was guilty of exaggeration on that point. Perhaps if I were being nominated for something I would now have to withdraw, in order to avoid distractions. Anyway, I appreciate the comments.
The question was never whether Daschle committed tax fraud, which I assume to be a felony (I am no attorney). I gather this is a case of negligence, which can be resolved by paying up. My new Keloland colleague, Doug Wiken (welcome aboard Doug!) adds a comment to my post.
I guess I assumed Daschle was too smart to get caught in something like this after having watched what happened to a few Clinton appointees with "nanny gate", etc. And another appointee or two of Obama's did as well. This might be (a big might be) a case of when is a gift not a gift and when is a gift taxable or not. My guess is that Obama is having the appointees records gone through with a fine comb compared to previous administrations since he won one of his first elections by carefully checking nomination petitions for phony signatures…
That is a very important point: why wasn't Daschle smart enough to avoid something like this? I can't agree about Obama's "fine comb," since Senator Daschle is one of three major appointees who have embarrassed the incoming Administration with their tax troubles, and he is the second of these nominees to withdraw. Tim Geithner survived and is now Treasury Secretary. I suspect that Daschle might have survived as well, had he been the only nominee to face this sort of problem. Geithner benefited from first exposure.
But the best comparison of the Geithner/Daschle cases I have yet seen was by Christopher Beam in Slate (no right wing organ, that, though I don't know if it meets Professor Newquist's standard for real journalism).
On the surface, Daschle's screw-up looks a lot like Geithner's. Both men underestimated how much they owed—or simply underpaid. Both situations involve gray areas or confusing aspects of the elaborate U.S. tax code. And, of course, both blamed their accountants…
One big difference is the nature of the oversights. Geithner's mistake was procedural—he reported income incorrectly—whereas Daschle's was substantive—he failed to report some income at all… Sure, there's a gray area around what constitutes a gift or a fringe benefit (on which you don't have to pay taxes) and a business transaction (on which you do). But the car service provided by InterMedia Advisors, for which Daschle sat on the board and earned more than $2 million in consulting fees, doesn't seem particularly ambiguous. "Under Section 132 of the Internal Revenue Code, the value of transportation services provided for personal use must be included in income," the finance committee reported last Friday. "Senator Daschle estimated that he used the car and driver 80 percent for personal use and 20 percent for business."
Even less gray is the $80,000 of consulting income Daschle simply failed to report. He's got a decent excuse—InterMedia screwed up its calculations and didn't include that income in its annual statement. But the disparity should have been clear in Daschle's books. (Apparently the IRS agrees: While the service didn't penalize Geithner, it did slap Daschle with fines.)
But the trickiest question for Daschle is one of judgment. If he had been using the car since 2005, why did it only occur to him to report it in 2008? If he makes it to a committee hearing, that will be the question of the day. Politicians tend to get religion as confirmation hearings approach. Did that happen with Daschle?
If Beam's analysis is correct, Daschle's negligence is objectively worse than Geithner's, and may explain why his support in Congress and the media collapsed. But surely that last point is more important. Daschle's behavior suggests that he knew his tax record was a liability as soon as he was picked for the HHS post. Surely he had ambitions before that point, so why did he jeopardize them for a paltry hundred grand plus (more than Aberdeen will pay its city manager) out of the five million or so he made after he left the Senate?
The answer is suggested by the YouTube clip of an old Daschle political add that Jason posts. Watch it if you haven't seen it, because it is breathtaking in hindsight. It shows Daschle driving the "old rusted Pontiac" past Washington's BMWs and Limos, and living cheap in D.C. "After 15 years and 238,000 miles," we hear, "Tom Daschle still drives his own car to work, every day." Tom Daschle understood very well how a South Dakota Senator want the folks back in Pennington County to think of him.
The point is, he stopped being that kind of guy as he grew in national stature. I, for one, can hardly blame him. But he also stopped tending the appearance of rustic Roman virtue, and that mattered. I can't agree with Doug Wiken on this point:
South Dakota "dumped Daschle" because Thune ran a deceptive campaign on irrelevant issues and Daschle was too confident of the impact of what he had done for South Dakota would have on the election. He did not effectively slam Thune for his apparent disrespect for Democratic family values. Daschle instead talked about his Russian grandfather. I watched people at a meeting sitting shaking their heads, but Daschle kept right on with it. It did not work. Thune is no real great shakes just because he beat Daschle.
Thune is "great shakes just because he beat Daschle." Unseating the Senate Democratic leader is a heroic deed in song and story. But Daschle didn't lose South Dakota because of his Russian grandfather. He lost it because of his big house in Virginia.
Defeat released him to make a lot of money, but Daschle is no ordinary plutocrat. He craved for distinction and honor, and hoped to do a great deed for his country (Canadian style health care?). Having been trained in classical political philosophy, I admire such a man even when I do not agree with his vision.
You might have thought he would have learned a lesson from his defeat. He didn't. Accepting the gift of a car and a driver, who, I would guess, sat around all day at full salary waiting for the boss, repudiates every bit of wisdom in that early political spot. As for paying the taxes on the gift, well, that would admit that it was a gift and not a deserved recognition of his elevated stature? Such is the stuff that brings an end to noble ambitions.
I first met Tom Daschle some years ago, just before he became leader of the Senate Democrats. I was privileged to talk to him, and I found him very clear headed and intelligent. He was also generous in his conversation. I liked him a lot, and have admired him since. I have written in the American News that we in South Dakota should be proud of him. But it is now apparent that he suffered from a tragic flaw, and around that, sooner or later, one will get a tragedy.
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