Obama Admits 'i Screwed Up' Over Daschle

Barack Obama has admitted that he "screwed up" over the botched appointment of Tom Daschle as health secretary after his trusted mentor was forced to withdraw his nomination over $128,000 (£89,000) in unpaid taxes.

Daschle, who had been expected to drive through sweeping healthcare pledges made during the election campaign, is the third of Obama's appointees to have tax problems, calling into question the president's claims to represent a new way of doing business in Washington.

"I screwed up,'' Obama said in an interview with NBC. "It's important for this administration to send a message that there aren't two sets of rules, you know, one for prominent people and one for ordinary folks who have to pay their taxes.

"I'm frustrated with myself, with our team … I'm here on television saying I screwed up."

Also yesterday, Nancy Killefer withdrew her name from consideration as the White House performance officer because of problems over payment of payroll taxes for household help.

However, the departure of Daschle, a former Democratic leader in the Senate who guided Obama on his arrival in Washington four years ago, is Obama's biggest blow so far.

Daschle's departure shocked Washington, in part because he and Obama had been adamant 24 hours earlier that the tax lapses were mistakes that should not stand in the way of confirmation. Obama said he "absolutely" supported Daschle.

Yesterday, Daschle said he did not want to distract from the economic rescue plan now before Congress, or Obama's plans for healthcare reform.

"This work will require a leader who can operate with the full faith of Congress and the American people, and without distraction," Daschle said in a statement. "Right now, I am not that leader, and will not be a distraction."

Obama said in an earlier statement that he accepted the departure of one of his closest confidantes "with sadness and regret. Now we must move forward."

"Tom made a mistake, which he has openly acknowledged," he said. "He has not excused it, nor do I. But that mistake and this decision cannot diminish the many contributions Tom has made to this country."

The White House said Daschle had not been pushed to stand aside, and that Obama could still claim to be raising ethical standards in Washington.

"The bar that we set is the highest that any administration in the country has ever set," the White House spokesman, Robert Gibbs, told reporters.

Commentators said Daschle's exit threatened Obama's plans to overhaul the healthcare system, a central policy initiative and one so important that Obama had given Daschle a post both at the department of health and human services and within the White House itself.

Daschle withdrew from both posts yesterday and the Washington Post reported that advisers did not yet know whether the next nominee would serve in dual roles.

Daschle's departure was over his failure to pay $128,000 in taxes owed for use of a driver and limousine provided to him by a media firm. Daschle was chairman of the firm's advisory board. Last month he paid more than $140,000 in arrears and penalties for failing to report the use of the limousine.

A week ago, the Senate accepted a similar explanation from Timothy Geithner, confirming him as treasury secretary despite his failure to pay $34,000 in taxes several years ago.

But Daschle ran into greater opposition. "Daschle is one oversight case too many," said the New York Times.

Although Daschle, as a former member of the Senate finance committee, helped write tax laws, he explained to a committee on Monday that he did not understand that the round-the-clock car and driver in his new life was subject to taxation and not just a gift from a friend.

With Daschle's swift exit, Obama hopes to put to rest questions about a White House double standard in ethics reform.

Obama took on Daschle's most seasoned staff to run his Senate office when he arrived in Washington in 2004. A number of Daschle loyalists have jobs in the administration.

But Daschle had long faced questions about his career moves after leaving the Senate following his defeat in the 2004 elections. Though never a registered lobbyist, he earned nearly $5m advising firms. His wife, Linda, was a prominent lobbyist while Daschle was in the Senate. That record sat uneasily with Obama's stand against the influence of lobbyists on the political process.

Questions over Daschle's personal finances presented a problem for a president elected on a pledge to bring higher ethical and moral standards to Washington.

Contenders for jobs in the administration were required to submit a lengthy questionnaire about their business interests and those of their family.

Candidates were asked specifically about tax payments for domestic help – an area that sunk some of Bill Clinton's nominations. Obama also tightened regulations on hiring lobbyists.

But Obama ran into problems even before his inauguration. Bill Richardson, the New Mexico governor, was forced to stand down for consideration for the post of commerce secretary amid an inquiry about campaign contributions.

Obama moved to fill the commerce post yesterday, nominating a Republican from New Hampshire, Judd Gregg.