WASHINGTON (Reuters) - President Barack Obama was hit on Tuesday by the embarrassing withdrawal of his nominee to oversee the healthcare system, distracting from his efforts to press on with the huge economic stimulus package he wants passed by Congress.
Tom Daschle, a former Democratic leader in the Senate and a key Obama adviser named to lead sweeping healthcare reforms, withdrew from consideration to become health secretary. Daschle said he did not want to become a “distraction” after tax errors caused him to pay $140,000 in back taxes.
“I accept his decision with sadness and regret,” Obama said in a statement.
Earlier on Tuesday, Obama’s nominee to become the first U.S. “chief performance officer” to oversee government budget and spending also withdrew her name from consideration because of tax questions.
The staff issues put Obama, who is just two weeks into his presidency, on the defensive. On Monday Obama had said he “absolutely” backed Daschle.
Obama, a Democrat, succeeded Republican George W. Bush on January 20 after an election campaign in which he pledged to bring high ethical standards and change to Washington’s political style.
On Tuesday Obama had wanted to advance his theme of bipartisanship by naming a third Republican to his cabinet -- for the post of commerce secretary -- and scheduled television interviews to push his economic agenda.
Obama is trying to push a nearly $900 billion stimulus package though Congress to revive the sagging U.S. economy.
Nancy Killefer, Obama’s choice to oversee budget and spending reform, withdrew her nomination citing personal tax issues that “could be used to create exactly the kind of distraction and delay” the administration should avoid.
The White House declined to elaborate on Killefer’s case, saying only, “She has withdrawn and we accepted her withdrawal.”
Killefer was the third Obama nominee to face income tax questions.
Treasury Secretary Timothy Geithner’s nomination faced criticism over his late payment of $34,000 in self-employment taxes. He was eventually confirmed.
BLASTED IN EDITORIAL PAGES
Although he received the backing of Obama and colleagues in the Democratic-controlled Senate on Monday, Daschle’s nomination was hammered in newspaper editorial pages on Tuesday. Daschle has also faced questions over his earnings since he left the Senate.
Some editorials said the issue threw into question Obama’s commitment to a stricter ethical policy in the White House.
“Mr. Daschle is another in a long line of politicians who move cozily between government and industry,” The New York Times said. “Mr. Daschle could clear the atmosphere by withdrawing his name.”
“Surely President Obama can find qualified people to serve in his cabinet who aren’t hustling to write overdue checks to the IRS,” the Philadelphia Inquirer said in its editorial. “Daschle’s error is too serious to ignore; it should disqualify him from serving in the cabinet.”
The recurring tax embarrassments threatened to grab the spotlight from Obama’s push for rapid passage of the economic stimulus bill.
The Senate was debating the stimulus proposal on Tuesday, but Republicans are putting up increasing resistance to Democratic proposals, which they say put excess weight on government spending -- rather than tax cuts -- to revive the economy.
Obama on Tuesday nominated Senator Judd Gregg as commerce secretary, the third prominent Republican in his Cabinet, but avoided shouted questions about Killefer’s withdrawal from her nomination.
Gregg, 61, is the top Republican on the Senate Budget Committee. He could play a key role in selling Obama’s stimulus package to skeptical members of his party.
“Judd is a master of reaching across the aisle to get things done,” Obama said at a ceremony at the White House to introduce Judd.
Obama, who wants the stimulus package on his desk by the middle of February, scheduled short Oval Office interviews in the afternoon with the major U.S. television networks.
He was expected to continue his press for passage of the measure, but was likely to face additional questions about his staff nominees’ tax issues.
Editing by Frances Kerry