You would think that by now the very first thing President Obama would do before he nominated someone for office is to have someone check their tax returns. After all, so far his appointees have produced four tax embarrassments:
- Tim Geithner, who was picked to be Treasury Secretary (and new boss of the IRS) “forgot” to pay $34,000 in taxes.
- Former Senator and “non lobbyist-lobbyist” Tom Daschle was designated to run the Department of Health and Human Services got a private car and driver and didn’t know he was supposed to pay $100,000 dollars in taxes on it
- Nancy Killefer chosen by President Obama to be the first Chief Performance Officer of the United States withdrew her name from consideration because she too has a history of not paying taxes.
- Kathleen Sebelius, President Obama’s Health and Human Services secretary, said in a letter obtained by the Associated Press that she made “unintentional errors” on her taxes and has corrected her returns from three different years.
Maybe the President feels 5 is his lucky number or has so much ego that he just doesn’t care, but news broke today that Lael Brainard, nominated to be Undersecretary of the Treasury Department for International Affairs is the latest Obama appointee to be tripped up by the Senate Finance Committee. Of particular concern is Ms. Brainard’s use of a home-office tax deduction, according to people familiar with the inquiry:
WASHINGTON — President Barack Obama’s nominee for the top international post at the Treasury Department has been sidetracked by a Senate committee’s investigation into her personal tax returns.
Lael Brainard, nominated in March as Undersecretary for International Affairs, is the latest Obama appointee to be tripped up by the Senate Finance Committee. Of particular concern is Ms. Brainard’s use of a home-office tax deduction, according to people familiar with the inquiry.
The delay in considering her nomination has left empty a treasury position responsible for negotiating with foreign governments as the U.S. gears up for the Group of 20 summit later this month, a meeting expected to focus heavily on financial regulation and economic stimulus programs. It is also reviving questions about whether a rigorous vetting process has gone too far and hobbled the administration.
“We’re into September and with no confirmed undersecretary it seems to me that’s a serious disadvantage,” said John B. Taylor, a Stanford University professor who served in the post from 2001 to 2005.
Ms. Brainard has been working at the Treasury on preparations for the G-20, people familiar with the matter say, but until she is confirmed she can’t directly negotiate with foreign governments.
The international chief at the Treasury has played key roles. When the U.S. seized control of mortgage giants Fannie Mae and Freddie Mac last year, then-Undersecretary David McCormick called nervous foreign officials, whose countries had large investments in the firms, to urge them not to sell their holdings.
Previous holders of the office include current Treasury Secretary Timothy Geithner and Lawrence Summers, one of President Obama’s top economics advisers.
Treasury’s top tax policy job also remains vacant after University of Southern California law professor Elizabeth Garrett withdrew her nomination for undisclosed reasons amid vetting by the finance committee. People familiar with the Obama administration thinking say the administration is likely to nominate Michael Mundaca, who is now serving as acting assistant secretary for tax policy, for that post.
The committee also derailed the nomination of former Sen. Tom Daschle as health secretary for tax-related reasons. Another White House nominee, Nancy Killefer for chief performance officer, withdrew her nomination because of a 2005 tax lien.
The delay in Ms. Brainard’s nomination is especially noteable because her husband, Kurt Campbell, was confirmed by the Senate on June 25 as Assistant Secretary for East Asian Affairs. If the couple filed a joint return, any errors would be his, too. State Department nominees are under the jurisdiction of the Senate Foreign Relations panel, and they are not subject to Finance Committee vetting.
Neither Ms. Brainard nor Mr. Campbell returned calls seeking comment.
“The Finance Committee conducts due diligence on nominations, and that’s nothing new,” said Jill Kozeny, a spokeswoman for Finance Committee Ranking Member Charles Grassley, R-Iowa. She said the process is confidential. Dean Zerbe, a former investigator for the Finance Committee, said it is not uncommon for questions about home-office deductions to come up with respect to nominees’ tax returns.
“Any time we saw it, sure, we’d want to know what it is,” he said. But he said at most, a discrepancy would lead committee staff to ask the nominee to file an amended return. “Normally, that’s not anything that would disqualify somebody,” Mr. Zerbe said.