HHS Pick Built Connections Over Decades

By Ceci Connolly
Washington Post Staff Writer
Tuesday, February 3, 2009

As he battles this week to save his nomination to be secretary of health and human services, one thing is certain: No one in Washington has a better-positioned network of allies in the Obama administration than Thomas A. Daschle.

Over three decades on Capitol Hill, including 10 years as the Senate Democratic leader, Daschle has nurtured one of the largest, most experienced talent pools in the city. His charges guided Barack Obama from his first days in the Senate, through the presidential race and into the White House. Daschle’s tentacles, moreover, stretch far beyond the agency Obama picked him to lead, reaching across the entire administration from the upper echelons of the White House to mid-level departmental positions to Obama’s kitchen cabinet.

The network is being tapped this week as Daschle and his allies scramble to explain why he did not pay more than $100,000 in back taxes, primarily for the use of a car and driver for three years. After a 75-minute closed-door meeting yesterday with the Senate Finance Committee, he emerged ashen-faced and apologetic. His confirmation vote has been postponed until at least the middle of next week.

Republicans remained noncommittal yesterday, weighing the costs and benefits of perhaps killing the nomination of a former colleague and close personal friend of the president. Democrats rose to Daschle’s defense, including, most notably, the man who would be without much of his top staff were it not for Daschle.

Asked yesterday morning whether he stands by Daschle, Obama said firmly: “Absolutely.”

If he weathers the tax controversy, Daschle is likely to be one of the best-connected Cabinet secretaries in the administration, if not history.

At least a dozen Daschle alumni are stepping into the highest positions of the federal government. Already, Obama and Vice President Biden have tapped Daschle veterans to manage their staffs, guide foreign policy and craft public relations strategy. In addition to the new HHS chief of staff, the chiefs of staff to Biden, the National Security Council and Treasury Secretary Timothy F. Geithner all worked for Daschle. His allies oversaw Obama’s transition team — including vetting Daschle himself — and one serves as the president’s personal lawyer.

“This is notable for the breadth and scope and number,” said Chris Jennings, who was the Clinton administration point man on health care and knows the challenges of navigating the White House bureaucracy.

As news broke over the weekend that Daschle had made several tax errors, many of those former colleagues and aides helped mount a defense, praising his integrity on talk shows, in news releases and in whispered asides. Not a single lawmaker has called for him to withdraw.

But the real potency of the network will come if Daschle is confirmed, said Ross K. Baker, a political scientist at Rutgers University. With such well-placed, trusted advisers, he would be in a position to promote his priorities and shape policy well beyond the contours of his department.

“The fact that he has eyes and ears in the White House, rather than way down in the HHS bureaucracy, is really an advantage,” Baker said. He likened Daschle’s sphere of influence to the broad power that Henry Kissinger held as secretary of state in the Nixon administration.

“Geography is determinant of influence,” he said. “To have people proximate to the president is a real advantage.”

Like Daschle, Secretary of State Hillary Rodham Clinton can lay claim to an impressive network of insiders, developed during her husband’s eight years in the Oval Office and her eight in the Senate. Many have worked for Daschle as well. But the Clinton coalition has become fractured and she carries the lingering scars of a contentious fight with Obama in the Democratic presidential primaries.

By contrast, Daschle and Obama share an uncommon bond, forged during the 2004 campaign. Many — including aides to Daschle — had expected him to seek the White House. But the South Dakotan lost a nasty reelection fight, and the young Illinois legislator burst onto the national scene and into the U.S. Senate.

“Tom was the first guy to go with Obama” in the pre-presidential campaign season, said Frederick H. Graefe, a Washington lobbyist and one of Daschle’s oldest friends. “He told him, ‘Run now, don’t wait, don’t make the mistake I made. I’ll give you everybody I have — the campaign team, the personal staff, leadership staff, fundraising lists — lock, stock and barrel.’ ”

“It was a ready-made team,” Graefe added.

As a Senate leader with authority over not just his personal staff but several policy and campaign committees as well, Daschle employed more than 100 people at any given time. From 1994 to 2005, even more than the Clinton White House, “the University of Daschle” was the place to learn the inner workings of governing, Baker said.

More than half a dozen Daschle veterans hold high-ranking White House positions, most notably Pete Rouse, who was his chief of staff and is now senior adviser to the president, and Phil Schiliro, Obama’s legislative liaison.

Daschle-ites are also taking positions at the Agriculture Department and the Democratic National Committee. Some of his closest allies are among Obama’s most trusted outside advisers, a select group whose influence comes not from a title but from a personal bond. They include John D. Podesta, the Center for American Progress president who masterminded Obama’s transition; lawyer Robert Bauer; and political consultant Anita Dunn.

“The spokes of the wheel all lead to Pete Rouse,” said Dunn, who has deep ties to both men. “When Pete went to work for Barack, what Barack got — and I don’t think he realized it — was the only network in Democratic circles that from both a policy and political perspective came close to the Clinton network.”

Rouse got his start in Washington in the early 1970s when he and Daschle were young aides to then-Sen. James Abourezk (D-S.D.). In 1986, he began an 18-year stint with Daschle.

When Daschle lost in 2004, he encouraged his team to sign on with Obama. Rouse agreed and eventually recruited many of Obama’s top aides, including Schiliro and the husband-and-wife team Dan Pfeiffer and Sarah Feinberg.

If confirmed, Daschle will be “HHS secretary plus,” said Dunn, referring to the additional role as head of the new White House Office of Health Reform, which has a small but well-situated office in the basement of the West Wing.

If Daschle were working at HHS headquarters, his “embeds,” as Dunn calls them, could provide “an extraordinary level of information and access that most Cabinet secretaries don’t have.”

“It’s a matter of him not having to go in and forge relationships,” she said. “Daschle gets to deal directly with people he knows and is comfortable with.”

If as HHS secretary he wanted to tweak health tax policy, his longtime chief of staff, Mark Childress, would need only pick up the phone and call former colleague Mark Patterson, Geithner’s chief of staff. If there were an international health issue to resolve, Childress could contact Daschle alums Mark Lippert at the NSC and Denis McDonough on the White House staff.

And if Daschle needed assistance from Biden, he could turn to Ron Klain, the vice president’s chief of staff, who oversaw the Senate Democratic Leadership Committee for Daschle in 1995. Biden was making calls on Daschle’s behalf yesterday.

The Daschle hires that Obama has made are the “cream of the crop” of the Democratic establishment, Jennings said.

“People outside the Daschle orbit recognize his friendship with and influence with President Obama,” he said. “It’s the cumulative perceptions of his respect and influence within the administration and his former staff. Whether it’s an accurate perception or not, perception is reality in Washington.”

Staff writers Paul Kane and Joe Stephens and research editor Alice Crites contributed to this report.

UPDATE

Daschle Ends Bid for Post; Obama Concedes Mistake

WASHINGTON — Tom Daschle withdrew his nomination as secretary of health and human services on Tuesday after weathering four days of scrutiny over unpaid taxes, prompting President Obama to concede having “screwed up” in undermining his own ethical standards by pushing the appointment.

“I’ve got to own up to my mistake, which is that ultimately it’s important for this administration to send a message that there aren’t two sets of rules,” Mr. Obama said in an interview with NBC News. “You know, one for prominent people and one for ordinary folks who have to pay their taxes.”

Mr. Daschle, a closer confidant to Mr. Obama than any other cabinet nominee, had offered to step down over the weekend, but officials close to both men said Mr. Obama had urged him to fight for confirmation.

Mr. Daschle went to Capitol Hill on Monday to keep his confirmation on track, but by Tuesday morning, with the pressure showing no signs of easing, he told the president that he believed he had become a distraction and too wounded to be effective.

It was the rockiest day yet for the new White House. Two hours before Mr. Daschle withdrew, Mr. Obama’s nominee to be the chief White House performance officer, Nancy Killefer, pulled her name from consideration because of unpaid payroll taxes for a household employee.

The developments distracted attention from Mr. Obama’s effort to push his economic stimulus plan through the Senate and complicated the initiative that Mr. Daschle was to have led, his plan for overhauling the health care system.

The nominees’ tax problems also gave Republicans a new argument against Mr. Obama and his party as the economic debate proceeds: that Democrats are cavalier about taxing other people because they do not abide by the tax laws themselves.

In evening interviews on broadcast and cable television networks, Mr. Obama said he took responsibility for the errors. “And so I’m frustrated with myself, with our team,” he told NBC, “but ultimately my job is to get this thing back on track because what we need to focus on is a deteriorating economy and getting people back to work.”

He added, “I’m here on television saying I screwed up and that’s part of the era of responsibility.”

Mr. Daschle delivered the news in a call on Tuesday morning to Mr. Obama, who was in his study, just off the Oval Office. He also stepped down from his position as White House heath czar, a job with a West Wing office.

Mr. Daschle said Monday that his failure to pay $128,000 in taxes for the use of a friend’s chauffer and car service was “completely inadvertent.”

Declining an interview request on Tuesday afternoon, Mr. Daschle said in a brief statement distributed by the White House that he would not have been able to lead an overhaul of the nation’s health care system “with the full faith of the Congress and the American people.”

“I am not that leader,” Mr. Daschle said, “and will not be a distraction.”

The withdrawals by the two advisers represent the highest-level political casualties of the young administration and raised fresh questions about the vetting procedures for officials already selected and scores of positions that remain open.

Senate Republicans signaled their intention to step up scrutiny of all appointees. Treasury Secretary Timothy F. Geithner was confirmed last week after apologizing and weathering weeks of criticism for late payment of $34,000 in income taxes.

Both Mr. Daschle and Ms. Killefer pulled out on their own accord, officials said, after their tax returns were scrutinized by the Senate Finance Committee. On the campaign trail, Mr. Obama often expressed frustration to aides about the practice of cutting loose advisers at the first sign of political trouble.

“They both decided and recognized that their nominations would distract from the important goals and the critical agenda that the president put forward,” Robert Gibbs, the White House press secretary, said Tuesday.

Asked repeatedly whether the White House had quietly urged Mr. Daschle to step aside to quell the controversy, Mr. Gibbs said, “He did not get a signal.”

Among the people mentioned as possible candidates for the job of health secretary are Gov. Kathleen Sebelius of Kansas, a former state insurance commissioner; former Gov. John A. Kitzhaber of Oregon, a doctor; and Gov. Jennifer M. Granholm of Michigan. All are Democrats.

In the Senate, Democrats were caught by surprise by Mr. Daschle’s decision, particularly after his appearance at the Finance Committee on Monday, as well as several indications that he could win confirmation.

But Republicans were intensifying their criticism of his tax failings, and Senator Harry Reid of Nevada, the majority leader, said Mr. Daschle told him in a phone call on Tuesday morning that he believed the nomination was getting too much attention.

Senator Richard J. Durbin of Illinois, the No. 2 Democrat in the Senate, said Mr. Daschle, the former Senate majority leader, had done “the honorable thing to spare his family, the president and his colleagues in the Senate from a tough political battle that would lie ahead.”

Mr. Durbin added, “I think he would have prevailed in the end, but it would have taken a while, and there would have been some suffering.”

The day had been scripted by advisers to turn the page on the tax controversy and refocus on the economy. In a rare move, television anchors for five broadcast and cable networks had been invited to interview Mr. Obama about the urgency of passing the economic recovery plan, a decision that magnified the troubles at the White House by giving them increased prominence on the evening news.

He delivered almost precisely the same mea culpa to each of the anchors as they cycled through the Oval Office.

Hours earlier, as his advisers huddled in the West Wing to shape a strategy for responding to the dizzying turn of events, Mr. Obama and his wife, Michelle, made an unscheduled stop at a public school not far away.

“We were just tired of being in the White House,” Mr. Obama told second graders at Capital City Public Charter School.

Senator John Kerry, Democrat of Massachusetts, who sits on the Finance Committee, said he believed Mr. Daschle should not have withdrawn his name.

“I believe that when the smoke clears and the frenzy has ended, no one will believe that this unwitting mistake should have erased 30 years of selfless public service and remarkable legislative skill and expertise on health care,” Mr. Kerry said.

In the case of Ms. Killefer, administration officials said she had failed to pay more than a year’s worth of unemployment taxes on household help.

The District of Columbia filed a $946.69 tax lien on her home in 2005 for failure to pay the tax. That was disclosed to the Senate Finance Committee, but officials said her tax records were being further scrutinized.

“I recognize that your agenda and the duties facing your chief performance officer are urgent,” Ms. Killefer wrote in a letter to Mr. Obama on Tuesday.

“I have also come to realize in the current environment that my personal tax issue of D.C. unemployment tax could be used to create exactly the kind of distraction and delay those duties must avoid.”

Ms. Killefer, head of the Washington office of the consulting firm McKinsey & Company, was named to the new position on Jan. 7. In the announcement, Mr. Obama said she would help “restore the American people’s confidence in their government.”

He said at the time that her role would be to scour the budget for wasteful or inefficient spending.

Robert Pear and Carl Hulse contributing reporting.