October 18, 2016
Robert Rizzi, Partner and Dianna Mullis, Associate, Steptoe & Johnson, LLP
This post is part of a series on lessons learned from past presidential appointments. We’re grateful for the expertise of Robert Rizzi & Dianna Mullis of Steptoe & Johnson, LLP in developing this series.
This post is part of a series on lessons learned from past presidential appointments. We’re grateful for the expertise of Robert Rizzi & Dianna Mullis of Steptoe & Johnson, LLP in developing this series. You can read Part 2 here.
Lesson #2: Early Identification of Issues is Critical
Tom Daschle’s decision to withdraw his nomination to be secretary of the Department of Health and Human Services in the Obama administration might have been avoided or at least mitigated if some critical issues had been identified and addressed early in the process.
For many reasons, Tom Daschle, a former Senate majority leader, was the perfect nominee and the obvious point man to lead the campaign to win congressional enactment of the new administration’s health reform proposals.
The principal impediment to his nomination was failure to pay taxes with respect to the value of a common executive perk—the use of a car and driver. The failure to pay the required taxes was not intentional, but simply an error, likely a result of miscommunication between the nominee and his personal accountant.
The real problem was that the error was first discovered in the summer of 2008, but apparently was not highlighted to those in charge of vetting at the transition team headquarters until late December 2008. By that time, correcting the tax error by amending returns and paying amounts owed was viewed not as a routine response, but instead as the equivalent of a confession of a “tax cheat,” as he came to be described by those who opposed this and other nominations.
By the time the tax issues came to light, a number of other issues—a virtual cascade—surfaced in the vetting process. These included questions concerning travel and entertainment provided by a nonprofit corporation with which Daschle was associated; an inability to substantiate certain charitable deductions; the accidental failure to report some consulting income for which he had never received an IRS Form 1099; and questions concerning whether advice given to certain private clients constituted “lobbying,” which at this time in the new administration had been deemed a tainted activity.
Individually, at least in past nominations, these types of issues were not unusual and in theory, each could have been solved or at least mitigated had they been addressed early in the process. For example, the unreported consulting income could have been addressed by filing an amended return and the substantiation of charitable deductions might have been possible with more time and access to records. In any event, nothing could be done at the last minute.
The Daschle case study is, therefore, a lesson in early detection and response to potential vetting problems. History might have been different had this lesson been applied.
For further discussion of precedents, authorities and case studies in the vetting process, see the Presidential Appointments Vetting Guide prepared by the Partnership’s Center for Presidential Transition in collaboration with Allen & Overy and Steptoe & Johnson.Read Part 1Read Part 2Read Part 4Read Part 5Read Part 6