Daschle to face close scrutiny

Tom Daschle, once considered assured of breezing through his confirmation as secretary of Health and Human Services, soon will face tough questioning on Capitol Hill about underpaying his income taxes and his extensive work for clients in the healthcare industry, Republican aides said Saturday.

GOP lawmakers on the Senate Finance Committee are preparing to grill the former Senate majority leader about his failure to pay more than $128,000 in taxes for 2005, 2006 and 2007.

And Republicans are interested in hundreds of thousands of dollars Daschle earned for consulting work and speaking engagements with healthcare companies and groups in the years after his 2005 departure from the Senate.

Though not a registered lobbyist, the South Dakota Democrat over the last two years earned more than $2.1 million as a “special policy advisor” at Alston & Bird, a law firm with more than 50 lobbying clients in the healthcare industry.

According to financial disclosure forms filed with the Office of Government Ethics, Daschle also took in $153,200 in 2008 for giving speeches to healthcare companies and industry groups such as GE Healthcare, a leading manufacturer of medical devices.

A decade ago, Daschle’s wife did some work for the healthcare industry as well. In 1999 and 2000, Linda Daschle was among a group of lobbyists at Baker Donelson Bearman & Caldwell who represented the drug maker Schering-Plough Corp., which paid the law firm $470,000 over the two years, according to federal lobbying reports.

Tom Daschle has indicated he plans to resign from Alston & Bird if he is confirmed. He already stepped down from more than a dozen boards, including that of the Mayo Clinic, another influential voice in the healthcare debate.

Last month, the Office of Government Ethics concluded that Daschle “is in compliance with applicable laws and regulations governing conflicts of interest.”

And a Daschle spokeswoman said Saturday that the former senator was looking forward to his hearing before the Senate Finance Committee, likely to be in the next several weeks.

“He is happy to answer any more questions that members have,” Jenny Backus said.

GOP lawmakers -- many of whom cheered Daschle’s selection to head President Obama’s healthcare reform effort -- have been relatively quiet since news of his tax problems leaked Friday.

With only 41 votes in the Senate, Republicans have little leverage to stop Daschle’s nomination.

Meanwhile, senior Democrats rallied to Daschle’s side Saturday. Obama’s press secretary has said the president remains steadfastly behind Daschle.

But Daschle’s unpaid taxes -- which came to light just 2 1/2 weeks after Obama’s nominee for Treasury secretary, Timothy F. Geithner, had to admit he had failed to pay enough income taxes -- have held up his confirmation at a time when the Obama administration is trying to push ahead with a major healthcare reform campaign.

“There is a lot of concern on the committee,” said one GOP staffer who was not authorized to speak on the record about the issue.

After his nomination, Daschle paid $140,167 in back taxes and interest stemming primarily from his consulting work for a New York private equity fund owned by longtime Democratic donor Leo J. Hindery Jr.

InterMedia Advisors paid Daschle $1 million a year. And Hindery, a Daschle friend who has given hundreds of thousands of dollars to Democratic campaigns in recent years, provided Daschle with a car and driver.

But for three years Daschle did not report the car on his tax returns. He also neglected to report one month’s income because of what InterMedia said was a clerical error.

And he improperly deducted donations he and his wife made to charities that were not tax-exempt.

In addition to asking about the taxes, Republican lawmakers plan to ask Daschle about his work at Alston & Bird, whose clients have included pharmaceuticals such as Abbott Laboratories, hospital groups such as HealthSouth Corp. and pharmacies such as CVS Caremark Corp.

Daschle personally represented Minneapolis-based UnitedHealth Group, one of the country’s largest health insurers, Backus said.

In September, Daschle also earned $20,000 for speaking to America’s Health Insurance Plans, the industry’s lobbying arm in Washington.

Others who paid to hear from Daschle last year include Premier Inc., the Moses Cone Health System, the National Assn. of Boards of Pharmacy, CSL Behring, Misys Healthcare Systems, Prime Therapeutics and Ingalls Health System.

The insurance industry, which helped derail healthcare reform efforts under President Clinton, is expected to play a key role as the Obama administration launches a new campaign.

In his 2008 book -- “Critical: What We Can Do About the Health-Care Crisis” -- Daschle singled out insurance and pharmaceutical companies as potential obstacles to a major reform campaign.

Backus said Saturday that Daschle, who in recent years has become a leading advocate for overhauling the nation’s healthcare system, eagerly accepted invitations to speak to groups like the insurers.

“Any time people wanted to hear from him, he welcomed it,” she said.

--

noam.levey@latimes.com

Tom Hamburger in our Washington bureau contributed to this report.