Rumors and whispers

by Ken Feltman


updated February 4, 2009

What a difference a day makes! Tom Daschle had the president’s support and enough votes to be confirmed by the Senate, but people close to him tell me he was disheartened to the point of withdrawing by two things: First, Daschle was angered by a February 2 New York Times editorial calling on him to quit.
Secondly, his super-lobbyist wife, Linda Hall, came under attack from Glenn Greenwald of Salon.com on Sunday. Greenwald used the word whore several times and quoted bloggers and articles from people who have long distrusted her representation of large defense contractors.

Greenwald dredged up a 2002 Washington Monthly article that alleged that Tom Daschle, as a Senator, and Linda Hall Daschle, as FAA acting administrator, joined forces “to reduce safety inspections of an air-charter company owned by a family friend.” Later, in 1993, one of the air-charter company’s planes “crashed in a snowstorm in Minot, North Dakota, killing the pilot and three doctors….”

Greenwald writes that Linda Hall was cleared in an Inspector General report only “after numerous accusations of serious wrongdoing.” He goes on to say that, “Time and again, companies with a very substantial stake in legislation before the Daschle-run Senate paid huge fees to his wife.”

Linda Hall started her own public policy lobbying firm last month, with her husband poised to become HHS secretary. Daschle was concerned that his wife’s new venture would suffer because of his tax troubles.

No wonder Chief-of-Staff Rahm Emanuel wants to distance himself from the White House strategy of having Timothy Geithner’s confirmation hearing proceed first. But there may now be a Gigi offensive in the works. According to rumors, Gigi stands for “Get Geithner,” not the 1950s movie. After a person is confirmed, it is difficult to get him out, but with two tax-tainted Obama appointments bowing out within a few hours yesterday, Geithner and the White House may not have felt the last of the anti-Geithner pressure.
The administration needs to get a few wheels back on the wagon.

Do not expect the Daschle derailing to end the administration’s healthcare reform efforts. Daschle has a network of loyal former staffers from his Senate days and many are in secure positions in the Obama administration.
Do expect that clients of Daschle’s former law firm and Linda Hall’s former and current firms will have more difficulty getting a Capitol Hill hearing as reform efforts continue. Guilt by association is very popular in Washington.

updated February 2, 2009

The stimulus package passed by the House includes an important – and thus far undebated – healthcare reform provision. The bill provides for a Comparative Effectiveness Research Council. The Council would identify medical procedures determined to be ineffective or too expensive. Those procedures would no longer be reimbursed under federal healthcare programs and Congress could remove the tax favored status of private plans that did not also ban them. This would be a dramatic step toward rationing of healthcare.
Tom Daschle, President Obama’s choice for Secretary of Health and Human Services, has advocated something quite similar – a Federal Health Board – that would determine which medical procedures would not be eligible for reimbursement in post-healthcare reform America. Something so important as rationing healthcare should be debated, not slipped into a bill designed to stimulate the economy.

Daschle’s appointment is in jeopardy because, like Treasury Secretary Timothy Geithner, he has a tax problem. On January 31, 2009, a key Republican senator told me that rumors are circulating that the Obama administration knew weeks ago about the Geithner and Daschle tax problems. Chief-of-Staff Rahm Emanuel determined that Daschle’s situation would appear to average Americans to be much more serious than Geithner’s. He calculated that as a former majority leader of the senate, Daschle would be able to count on old friends and fellow “Senate Club” members to vote for him, regardless of the tax trouble.
Emanuel argued, therefore, that if Daschle’s confirmation proceeded first, he would be approved but Geithner would be sacrificed because the public would not permit two tax-tarnished cabinet secretaries. So Geithner went first and survived. Supposedly, White House Democrats have been praising Emanuel for the shrewdness of this strategy. Because of Emanuel’s high-handed treatment of Republicans, the Senate Republicans may overcome their reluctance to oppose a former club member.

Emanuel denied any part in developing this strategy. But it is a measure of his power – real and imagined – that Republicans see him as the mastermind. Obviously, if Daschle is brought down, Emanuel’s stature will be diminished.

Emanuel will take credit for the likely appointment tomorrow of Republican Senator Judd Gregg as Secretary of Commerce. Gregg is the key economic policy authority among senate Republicans. He is one of the two or three most influential Republicans in the senate. So Obama can remove an important GOP resource from the senate and probably get a Democrat in that seat, either through appointment by New Hampshire’s Democratic governor now or in an election in 2010.
Gregg’s leaving the senate, coupled with Minnesota finally going Democratic after court challenges are decided, could give Obama his filibuster-proof senate.

While the new Obama administration seems off to a good start, the Republican minority has been given reasons to grumble and obstruct. When Emanuel thumbed his nose at Republican members of Congress at the inauguration ceremony, he rubbed salt in a wound that may fester. Why did he gloat?

Soon, Obama confronted some of the resulting anger when he gathered the GOP House and Senate leaders to try for bi-partisan support for his economic recovery program. The Republicans, expected to be compliant, balked and the president reminded them that he would not compromise because he had won the election: More salt in the wound.

The Republicans resolved to stand tough and by the next day, Obama had backed off and all but admitted that tax cuts would be part of the recovery plan. Emboldened, the Republicans decided to keep resisting. In a show of solidarity, not a single House Republican voted for the stimulus package.

Senate Democrats are growing concerned. If the Democrats cannot get Senate Republicans to support the stimulus bill, Obama will “own” the bill as soon as he signs it. Any problems later will be tied to Obama and the Democrats. This is quite a risk so early in a presidency. Obama was at least initially willing to work with Republicans. It was House Speaker Nancy Pelosi who larded up the bill with pork and social policy provisions (formerly called “earmarks”), losing Republican support.

No matter what happens now, Obama has lost ground in his first major legislative test. Emanuel has had a shaky start. He alienated Republicans with his arrogance and got rolled by Pelosi. Look for the White House to retool quickly to avoid further slips.

An association that consults in the development of the software used to prepare returns is outraged at the testimony by Treasury Secretary Timothy Geithner. They believe he knew he was evading taxes and suggest that other Geithner shoes may drop.

Rumors and Whispers is updated frequently and sent regularly to media outlets.

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About Radnor Reports

Ken Feltman is past-president of the International Association of Political Consultants and the American League of Lobbyists. He is retired chairman of Radnor Inc., an international political consulting and government relations firm in Washington, D.C. Feltman founded the U.S. and European Conflict Indexes in 1988. The indexes have predicted the winner of every U.S. presidential election beginning in 1988, plus the outcome of several European elections. In May of 2010, the Conflict Index was used by university students in Egypt. The Index predicted the fall of the Mubarak government within the next year.
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