I do not personally know Tom Daschle, President Barack Obama's choice to be the new cabinet secretary for health and human services. The same for Timothy Geithner, the new man in the treasury.

I respect their reputations and public service, but I have absolutely no sympathy for the mess they find themselves in over shoddy income tax filings.


Barack Obama's choice for health secretary, former South Dakota senator Tom Daschle at a hearing in January 2008. ((Pablo Martinez Monsivais/Associated Press))

I suspect that a majority of Americans agree with me and most would not have confirmed Geithner for treasury secretary, as has now been done. Nor would they sign off on Daschle for the high-profile health job, which the Senate looks like it will do. 

[Editor's note: On Tuesday, Feb. 3, Tom Daschle withdrew his candidacy for secretary of health.]

Let's understand one thing here. Official Washington, what ever you might think of it, is the big leagues when it comes to politics and public service.

The image of someone saying "shucks, I'm just a small country lawyer doing my best for the folks back home" just doesn't scan.

Those who make it to the top in this place — and there are few places more top drawer than the president's cabinet — are sharp people who know the game and, most of all, know its rules.

That they might break these rules, or try to skirt them, despite dozens upon dozens of examples of ruined careers because someone didn't register the nanny, or took gifts from the wrong folks, or flew on private jets without acknowledging the flight, or, as in these two cases, filed inappropriate income taxes forms, is a phenomenon I have seen too many times over the years and still cannot explain.


Treasury Secretary Timothy Geithner at his confirmation hearings. ((Pablo Martinez Monsivais/Associated Press))

Play by the rules

Let me tell you where your average Washington high-flyer stands.

In this city, there are hundreds of confirmable jobs available every year that candidates have to compete for and be scrutinized over.

In just my circle of friends, there are more than a few who hope to have an opportunity to serve and advance their careers. One is a judge seeking a promotion, a couple of others have sweated out the vetting process at the State Department, another is a lawyer at Justice and so on.

All these people know about the perils of dodgy income tax filings. So they hire the best accountants they can afford and they take no chances with their forms. They worry about the slightest suggestion of impropriety.

What's more, they go Dutch at lunch, they accept no gifts of any kind unless they pay its full value. One of my friends refuses to let me buy him a hotdog at the ballpark — and we've known each other for 20 years.

Complicated for whom?

The former head of the Federal Reserve Bank in New York, Geithner was asked to explain why he did not pay $43,000 in back taxes while he was at the International Monetary Fund.

Geithner's apology was accompanied by the explanation that the IMF has complicated payment and tax schedules.

Since most of its international employees are exempt from American taxes, he was caught up in an offset, he said: his pay was not being deducted at source and so he was expected to file separately to the Internal Revenue Service.

It's true, the process is complicated but this is not a new phenomenon. IMF tax issues have been widely reported in the Washington media and even if Geithner knew nothing of this, certainly his accountant would.

Daschle's case centred on the non-payment (until last month) of $146,000 in back taxes, according to the Washington Post.

A well-respected former senator, Daschle was defeated in 2004 and went to work for a Washington law firm, Alston and Bird, as well as for an investment firm, InterMedia Advisers, where he earned in excess of $5.2 million from both jobs and speaking engagements over the past four years, according to a recent financial statement.

At least $250,000 of that amount is from speaking fees to the leaders of the health industry, which he was about to be charged with overseeing.

No corrective action

But it was from his stint at InterMedia that his tax problems stemmed.

In 2007, InterMedia informed Daschle that it had neglected to report one of his monthly payments, $83,000, to the IRS. No corrective action appears to have been taken until January of this year.

Also, InterMedia supplied a car and chauffeur for Daschle's use. The Senate finance committee said that arrangement was worth more than $255,000 in unreported income.

Daschle's spokesperson, Jenny Backus, said Daschle naively believed that the use of the car was "nothing more than a generous gift from a friend." According to Backus, in June of 2008 Daschle questioned the use of the car and asked his accountant about it.

It was in June, of course, that Barack Obama was looking as if he could be president and some of Daschle's detractors are suggesting the former senator's rethink was generated by the prospect of a high-level job.

(The finance committee was also looking into $276,000 in charitable donations that Daschle and his wife, Linda, claimed over three years.)

As often happens in American politics, as a scandal swirls in Washington, someone comes up with a poll.

With impeccable timing, the IRS this week came out with its annual poll on income taxes. The survey itself was taken in August and does not reflect directly on the Daschle or Geithner cases.

Still, 90 per cent of those polled said "it was not at all acceptable for Americans to cheat on taxes." Sixty-seven per cent said "anyone who cheats should be held accountable."

Cheaters never prosper, as the old saying goes. But in this case, the one who may be hurt the most is President Obama, who supported both men and who is still trying to run his campaign for change and a new way of doing things in the nation's capital.