Obama hits new snag as Cabinet nominee questioned - International Herald Tribune

Obama hits new snag as Cabinet nominee questionedThe Associated PressPublished: February 3, 2009
WASHINGTON: President Barack Obama's young administration hit a new snag as a second Cabinet nominee faced questions over his tax returns, an unwelcome distractionas the president urges swift passage of his massive economic stimulus plan.
Former Sen. Tom Daschle apologized Monday for failing to pay more than $120,000 in taxes and appealed to his former colleagues in the Senate to approvehim all the same. Obama said he was "absolutely" sticking with his nominee for health secretary.
The White House both underscored the magnitude of the problem and tried to downplay it in the space of seven words. "Nobody's perfect," said press secretaryRobert Gibbs. "It was a serious mistake. ..."
The administration did receive some good news Monday, as another Cabinet choice, Eric Holder, was confirmed as the first African-American U.S. attorneygeneral.
Holder's nomination initially had been viewed as problematic because of questions over his role in controversial pardons when he was the No. 2 Justice Departmentofficial under President Bill Clinton. Now Holder will be the country's chief law enforcement official as head of the Justice Department.
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Nobody was predicting defeat for Daschle's nomination as secretary of health and human services, but it was proving an unsavory pill to swallow for senatorswho only last week confirmed Timothy Geithner as treasury secretary despite his separate tax-payment problems. The issue strikes a nerve as many Americansare struggling with their own serious money problems.
The Commerce Department reported that personal spending fell for the sixth straight month in December by 1 percent. Analysts had predicted a decline of0.9 percent. Incomes also dipped, and the personal savings rate shot higher, a sign that consumers remain extremely nervous about the economy.
The president predicted Monday some of America's troubled banks still could fail, despite a $700 billion financial bailout program, half of which has alreadybeen spent by the former Bush administration. The bailout program is separate from the Obama administration's more than $800 billion stimulus plan.
Obama has struggled to win Republican support on his stimulus plan. He did not win Republican votes when the $819 billion version of the bill passed theHouse of Representatives last week. Republican senators also have not been well disposed toward it, declaring the measure too focused on government spendingto the exclusion of tax cuts. The Senate version of the plan totals $900 billion and a vote was expected later this week.
The president appealed to Congress on Monday saying that "very modest differences" should not keep it from getting approved quickly.
Obama issued his new appeal at a meeting with Vermont Gov. Jim Douglas, the Republican vice chairman of the National Governors Association. Douglas is amongseveral Republican governors who have broken with their party colleagues in Congress in seeking approval of the Obama measure.
Separately, the financial bailout program appeared likely to be expanded beyond the $700 billion now allocated by Congress.
"We can expect that we're going to have to do more to shore up the financial system," Obama said in an interview with NBC television.
An announcement is expected next week on how the Obama administration plans to use the last $350 billion of that effort, which has come under heavy congressionaland public criticism.
The massive infusion of taxpayer money into the financial sector has largely failed to thaw U.S. credit markets, while some financial institutions usedthe money to pay dividends, buy other banks and pay out big year-end bonuses to employees.
The president also said that he was taking full responsibility for rescuing the U.S. economy, which is facing its worst downturn in 80 years.
In the NBC interview, Obama referred to establishing a review board for the financial bailout program, but aides later corrected that, saying he meant tosay it would be put in place for the stimulus package.
"If I don't have this done in three years then there's going to be a one-term proposition," Obama said, already looking forward to the 2012 presidentialelection.
Also Monday, Daschle sought to explain how he overlooked taxes on income for consulting work and the use of a car service. He also deducted more in charitablecontributions than he should have.
"I apologize for the errors and profoundly regret that you have had to devote time to them," he told committee members.
Daschle was an early supporter of Obama's presidential bid, and several of Daschle's former congressional staffers went to work for Obama after Daschlelost his re-election bid in 2004.
Daschle filed the amended tax returns after Obama announced he intended to nominate him as secretary of health and human services.
Before Daschle's difficulties over back taxes, Geithner's confirmation as treasury secretary was delayed after it was revealed that he had failed to paymore than $34,000 in taxes.
Meanwhile, Democratic officials said Obama will nominate Republican Sen. Judd Gregg as commerce secretary on Tuesday. The two Democratic officials familiarwith the plan disclosed Gregg's pending nomination late Monday on condition of anonymity because a formal announcement had yet to be made.
Gregg would be the third Republican to join Obama's Cabinet, if confirmed. The others are Defense Secretary Robert Gates and Transportation Secretary RayLahood.___Associated Press Writer Laurie Kellman contributed to this report.