Why tax problems have plagued Team Obama

It’s been a recurring question about the young Obama administration: Why have so many of its nominees come down with tax problems?

Timothy Geithner, Tom Daschle, Ron Kirk, Nancy Killefer, and a number of others who didn’t make it to the nomination stage — all have been felled, or tainted, by unpaid tax bills ranging from a few hundred dollars to more than $140,000. After the first few cases, Republican Rep. Eric Cantor quipped that “it’s easy for [Democrats] to sit here and advocate higher taxes because — you know what? — they don’t pay them.”

For their part, some Democrats have suggested that the Senate Finance Committee, which investigates nominees before confirmation, has gotten so nit-picky in examining tax returns that good candidates have gone down in flames. “The Finance Committee has gone a bit overboard, and I find it a little striking that a Democratic committee is doing this to a Democratic administration,” one anonymous insider told the Politico recently. “This has been a lot more in-depth and detailed, to the point of being silly.”

Now, we find out that neither Cantor nor the unnamed Democrat was correct. The problem is not with Democrats in general, nor with the Finance Committee in particular. The problem is the Obama White House, which, fully aware of its nominees’ tax issues, decided that those problems were trivial, or that the public wouldn’t care about them, and pushed forward with nominations that in the past would have been quietly shelved.

In little-noticed remarks last week, Sen. Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee, gave us a look inside the confirmation process. Irritated by news reports suggesting the committee had been too hard on Obama’s nominees, Grassley pointed the finger back at the White House.

“I want to stress that the Finance Committee is not doing anything different now from what it has always done under the leadership of either Senator Baucus or me,” Grassley said, referring to Democratic chairman Max Baucus of Montana. “We are vetting nominees for the current administration the same way we vetted nominees for the previous administration.”

“The tax issues of the nominees considered by the committee this year came to be public only because the nominees chose to proceed.”

Grassley said the committee has always requested three years of tax returns from nominees, and always employed experts to review them. And in the past, he added, “many nominees” faced questions based on their tax returns. The reason tax problems seem more prevalent now, Grassley explained, is that in previous administrations those nominees chose to quietly withdraw. Now, they try to stick it out, leading to sometimes embarrassing controversy. “Chairman Baucus and I agree that if a nominee chooses to proceed after tax issues are identified, then the public should be informed of those issues,” Grassley said.