Obama talks tough with Wall St., but what about his Cabinet?

WASHINGTON – Last Thursday brought a bracing reminder of what a breath of fresh air Barack Obama can be. After news reports tallied up $18.4 billion in bonuses paid out to American financial executives last year – one in which Wall Street dragged down the rest of the economic world with its shocking failures – the president didn’t mince words.

"That is the height of irresponsibility. It is shameful," he said. "And part of what we’re going to need is for folks on Wall Street who are asking for help to show some restraint, show some discipline, and show some responsibility."

But the following day, when news reports came out that Obama’s health and human services secretary-designate, Tom Daschle, had initially failed to pay about $140,000 in taxes, mostly on a car and driver provided by a private equity firm, there was no scolding from the commander in chief.

Daschle, the former Senate majority leader, received more than $2 million in consulting fees from the firm along with some valuable perks. He failed to pay taxes on his car-and-driver perk. Separately, he apparently exaggerated the value of a charitable donation, leading to an inappropriate deduction. Having now repaid what he owes, Daschle hopes to be confirmed for Obama’s Cabinet.

If so, he will join Treasury Secretary Timothy Geithner, who paid $43,000 in back taxes and interest of his own, having failed to cover his share of payroll taxes while working overseas for the International Monetary Fund. With Obama’s backing, Geithner was confirmed by the Democratic-controlled Senate.

Democrats are now trying to rally around Daschle, too, portraying his tax problems as a rare blemish on a fine career. And some are saying that Daschle, like Geithner, is an absolutely crucial player in Obama’s administration. Just as Geithner’s appointment was necessary to reassure Wall Street, where he headed the Federal Reserve Bank of New York, Daschle is uniquely suited to steer the president’s healthcare proposal through Congress, his defenders say.

That may be so, and Obama, who declared yesterday he "absolutely" stands behind Daschle and who came into office with far more political capital than most presidents, may choose to grit his teeth and spend some more of it to get a second reformed tax evader confirmed for his Cabinet.

Still, the cost to Obama could be considerable.

Already, the tax avoidance of his nominees is giving fuel to the late-night comedians who have struggled to develop a take on the new administration. And Obama, whose high-mindedness at times verges on aloofness, will inevitably be attacked for putting his own team’s sense of superiority – the belief that Geithner and Daschle are so talented that they’re irreplaceable – ahead of the normal sense of accountability that would apply to people who fail to pay their taxes on time.

Tolerating such lapses could also diminish Obama’s moral leadership, the strong voice that rang out in condemning last week’s news of the Wall Street bonuses. The president’s ability to call a halt to irresponsible behavior by powerful people is needed to fulfill his pledge to reform the political system.

To be sure, there are many Americans who won’t take the lapses of Geithner and Daschle very seriously. Though some Republicans have condemned the two nominees in strong terms, other Obama opponents are holding back, perhaps fearful of a witch hunt in which all of Washington will be forced to scrutinize their forms for Medicare taxes, for drivers and nannies, underreported honoraria, and the like.

And some average Americans, frustrated by a system that requires anyone who sells an old sofa on eBay to calculate any profits for tax purposes, can well understand how tax payments can be misjudged without any dishonorable intent.

But there are just as many Americans who struggle mightily, calculator in hand, to figure out how much work-related travel was reimbursed and how much was not, whether that massage for an ailing back qualifies as a medical expense, and whether the $100 proffered to help the school band go to Tuscaloosa is a legitimate charitable deduction.

To them, the idea that Geithner and Daschle could amass underpayments greater than most family incomes isn’t a cause for much sympathy. And Obama, whose righteousness has struck a chord with Middle America, would do well to express his own outrage, rather than try to shield his nominees behind his own considerable presence.