Add Sebelius to list of Obama cabinet picks with tax troubles

WASHINGTON — Kansas Gov. Kathleen Sebelius on Tuesday joined a list of cabinet nominees who were forced to pay back taxes because of errors in their returns.

In a letter to the Senate Finance Committee, Sebelius, President Barack Obama's nominee to head the Health and Human Services Department, said she repaid nearly $8,000, including interest, because of "unintentional errors."

Sebelius said the errors concerned charitable contributions, the sale of a home and business expenses.

The list of nominees with tax trouble includes Treasury Secretary Tim Geithner and former Sen. Tom Daschle, who was Obama's first choice for HHS and withdrew after disclosing that he paid $140,000 in back taxes and interest.

Neither Sebelius nor the White House issued a comment.

Sen. Max Baucus, of Montana, the chairman of the Senate Finance Committee, which will vote Thursday on sending her nomination to the full Senate, quickly sent out a statement that indicated his full support.

"Congress is going to need a strong partner at the Department of Health and Human Services to achieve comprehensive health reform this year and that partner is Governor Sebelius," Baucus said. "She is the right person for the job."

Apart from the errors that Sebelius cited, Baucus and Sen. Charles Grassley of Iowa, the finance panel's ranking Republican, told her in a letter that "No additional items were identified that needed to be addressed as a result of our review."

Sebelius said in her letter that she found out about the errors when she hired a certified public accountant to scrub her tax returns from 2005 to 2007 after Obama nominated her.

She then filed amended returns. Those were included in the nomination packet on Sebelius that the White sent to the Finance Committee on March 17.

One of the errors resulted from not providing an acknowledgement letter from three out of the 49 charitable recipients to which she contributed money. The law requires the letter for any gift over $250.

Another involved an erroneous deduction for mortgage interest after she and her husband, Gary Sebelius, a federal magistrate judge, sold their home. The third involved business deductions.

The tax problems surfaced on a day when she appeared at her first hearing on Capitol Hill as a nominee. Her initial trial by fire was actually more of a warm embrace.

During more than two hours of largely friendly questioning, most members of the Senate Health, Education, Labor and Pensions Committee praised "her willingness" to take the job.

"I can't think of a tougher job to step into now," former Kansas Republican Sen. Bob Dole, who sat by Sebelius for nearly the entire hearing, told the panel.

The hearing gave her a roadmap to the concerns of the committee, which has jurisdiction over so much of what could be on her plate: AIDS, food safety, doctors who refuse to treat patients covered by Medicare, and more.

"We face a health system that burdens families, businesses and government budgets with skyrocketing costs," Sebelius said. "Action is not a choice. It is a necessity."

The hearing had a sentimental feel, as old friends such as Dole and Kansas Republican Sen. Pat Roberts rallied around one of their own.

Another former Kansas Republican senator, Nancy Kassebaum — who once led the health committee — also was supposed to be there. But "she was one of the 20,000 Kansans who lost power" in a weekend ice storm, Sebelius said.

It was also a reunion of old Senate allies as Dole, a former Senate Republican leader who headed his party's presidential ticket in 1996, sat across from Democratic Sen. Edward Kennedy of Massachusetts.

Kennedy, who's undergoing treatment for brain cancer, returned to his chairman's seat.

"I've benefited from the best of medicine," Kennedy said. "But we have too many uninsured Americans. We have sickness care and not health care. We have too much paperwork and bureaucracy. Costs are out of control. But today we have an opportunity like never before to reform health care."

The only combative moment during the hearing occurred when Republican Sen. John McCain of Arizona asked Sebelius if the government should offer an insurance plan that would compete with private plans.

It's a contentious issue as the debate over how and when to begin the expensive task of overhauling the health care system takes shape, even as the government spends billion to shore up the economy. Opponents of Obama's plan worry that a government-run insurance option would undercut private plans.

Sebelius started to answer McCain when he stepped in and said, "These are pretty straightforward questions, governor, I would think."

She replied, "If the question is, do I support a public option side by side with private insurers in a health insurance exchange, yes, I do."

The budget for HHS amounts to nearly a fifth of all federal spending. The Food and Drug Administration, the National Institutes of Health and the Centers for Disease Control and Prevention are all under its wing.


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