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Daschle Withdraws as HHS Pick

By Drew Armstrong, CQ Staff

FEBRUARY 3, 2009 -- Tom Daschle has withdrawn from consideration to be secretary of Health and Human Services, the White House said Tuesday.

Daschle, a former Senate majority leader from South Dakota, was dragged down by questions about his disclosure that he failed to pay all the taxes he owed since leaving the Senate in 2005. His nomination had come under intense scrutiny in recent days.

"Sen. Daschle decided to remove his name from consideration," said White House spokesman Robert Gibbs. "We're at a critical juncture at our nation's history . . . and the president has a robust agenda to deal with many of those problems." Daschle did not want to be "a distraction to that agenda," Gibbs added.

Daschle, a Democrat, will not stay on as head of the White House's Office of Health Reform, either, both Gibbs and Daschle spokeswoman Jenny Backus said. President Obama had created that position for Daschle to strengthen his hand in helping overhaul the nation's health care system.

Senate Majority Leader Harry Reid, D-Nev., said Tuesday afternoon that the White House was "working as we speak to have a name brought forward for HHS," in place of Daschle. But Obama, he added, was "not going to rush into anything."

One name mentioned in the early speculation about a possible replacement was two-term Kansas Gov. Kathleen Sebelius, who last year was seen as a potential running mate for Obama. As governor, she has emphasized health issues in her state budgets and she earlier served as Kansas insurance commissioner.

However, just two months ago, Sebelius said she didn't want to be considered for Obama's Cabinet because of the pressing fiscal problems facing her state. "The possibility of joining President-elect Obama's team is exciting and compelling, but my service to the citizens who elected me is my top priority in these difficult times," she said in early December.

Daschle said that the questions swirling around his tax troubles were too distracting for him to be the best person to help Obama overhaul health care.

"Right now, I am not that leader, and will not be a distraction. The focus of Congress should be on the urgent business of moving the president's economic agenda forward, including affordable health care for every American," Daschle said in a joint statement with Obama.

"I accept his decision with sadness and regret," Obama said.

Senate Democrats stood united behind Daschle just 18 hours before, promising to support his nomination and see him through the Senate. At an hour-long meeting with Senate Finance Committee members, Daschle had answered questions and told lawmakers that his mistakes were honest ones.

Daschle paid nearly $140,000 in back taxes and interest on Jan. 2, on income from 2005, 2006 and 2007. He had been scheduled for a confirmation hearing Feb. 10 before the Finance panel.

Daschle was the second nominee for Obama's Cabinet to disclose tax problems. Treasury Secretary Timothy F. Geithner also was forced to acknowledge underpayment of his taxes, but last week he was confirmed by the Senate for the Treasury job. He drew 34 "no" votes, the most of any Obama nominee thus far.

Geithner may have used up whatever public and political tolerance there was for such disclosures, however.

Overshadowed by Daschle's withdrawal was a second announcement Tuesday—that Nancy Killefer, whom Obama had chosen as chief performance officer, also withdrew her nomination in the face of questions about delinquent tax payments.

"I think they both recognized that you can't set an example of responsibility but accept a different standard in who serves," Gibbs said of Daschle and Killefer on Tuesday. "They both decided and recognized that their nominations would distract from the important goals and the critical agenda that the president put forward."

Setback for Democrats

For democrats, Daschle's withdrawal is a blow to plans to overhaul health care later this year, a major campaign promise by the Obama administration. Daschle was seen as uniquely qualified because of his knowledge of health policy and his close friendships in the Senate

Sen. John Kerry, D-Mass., said, "Today is not a good day for the cause of health care reform."

Sen. Kent Conrad, D-N.D., a close friend of Daschle, called the situation a "tragedy."

"It's very hard to have the facts catch up with the headline," Conrad said. "I think if people would have had a chance to read the investigative report and listen to the investigator they would have come to a very different conclusion."

Sen. Barbara A. Mikulski, D-Md., who is deeply involved in the Health, Education, Labor and Pension Committee's efforts to overhaul health care, said, "It's a sad day for Tom Daschle, but it's really a sad day for our country. He had such knowledge and skill we could have really moved ahead in doing real health reform. We could have done it in a way that was sensible, affordable, and at the end of the day people would have had access."

Finance Chairman Max Baucus, D-Mont., said, "I'm surprised. It's tragic, regrettable. He's a very good man, exceptionally qualified for the job. . . . I think he would have been confirmed," Baucus said. "He's made his decision. It's time to move on."

Unlike Kerry, Baucus insisted that the loss of Daschle would not affect the timetable for moving a health care overhaul.

"The committee's moving full speed ahead—and the HELP Committee is—on health care reform. President Obama is totally committed to health care reform. It could be a little blip. I don't think it's much."

Baucus said he did not know of other names that have been recommended for HHS secretary.

Other members rued the loss of Daschle's experience with health care policy.

"I'm disappointed because he has a great deal of ability in this field," said Sen. Orrin G. Hatch, R-Utah, who served with Daschle for 18 years.

Alan K. Ota, Alex Wayne and Catharine Richert contributed to this story.

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