Tom Daschle Withdraws as Obama's Health Secretary Nominee

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In a stunning setback for President Obama, Tom Daschle abruptly withdrew his nomination to become secretary of Health and Human Services today, following an admission that he failed to pay about $140,000 in back taxes.

In this Dec. 11, 2008 file photo, President-elect Barack Obama, right, stands with Health and Human...

In this Dec. 11, 2008 file photo, President-elect Barack Obama, right, stands with Health and Human Services Secretary-designate, former Senate Majority Leader Thomas Daschle, during a news conference in Chicago. Daschle recently filed amended tax returns to report $128,203 in unpaid taxes and $11,964 in interest, according to a Senate document obtained by The Associated Press.

(Charles Dharapak/AP Photo )

In a joint Obama-Daschle statement, Obama accepted Daschle's withdrawal "with sadness and regret."

"Tom made a mistake, which he has openly acknowledged. He has not excused it, nor do I," Obama said.

Daschle, a former Senate majority leader from South Dakota, who had been one of Obama's closest advisers throughout his presidential campaign, said his tax problems meant he had lost the faith of the American people and was therefore unable to serve.

"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 released by the White House.

"Right now, I am not that leader, and [I] will not be a distraction," he said.

In addition to being nominated to be HHS secretary, Daschle was also slated to lead Obama's healthcare initative as health czar, a post from which he also withdrew.

Daschle's retreat raises questions about whether Obama can keep his promise to make more affordable healthcare one of the cornerstone of his agenda in his first 100 days in office.

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Dems Maintain Support for Daschle

Daschle's decision to quit the nominating process was surprising because Democratic senators had rallied around him Monday and Obama said he "absolutely" stood by Daschle.

Obama's backing didn't stop criticism of Daschle's fitness to join the White House cabinet. Sen. Jim DeMint, R-S.C., said Obama was "losing credibility" by continuing to support Daschle. "Part of leadership is recognizing when there has been a mistake made and responding quickly," DeMint said.

Daschle's withdrawal came just hours after Nancy Killefer, Obama's nominee to be chief performance officer, withdrew her nomination following the revelation that she had a $946.69 lien on her property in 2005 for failure to pay taxes.

A third Obama Cabinet pick, Tim Geithner, admitted to Congress that he had owed and paid back more than $40,000 before he was confirmed as Treasury secretary last week, and New Mexico Gov. Bill Richardson withdrew his nomination as Commerce secretary over questions about state contracts.

The setbacks are likely to embarrass Obama, who announced a "new era of responsibility" at his inauguration and are likely to embolden Republican opposition to the president and his agenda at a time when Obama struggles to get his economic stimulus plan through Congress.

After a closed-door session before the Senate Finance Committee Monday, Daschle apologized and said his failure to pay taxes was unintentional.

"I deeply apologize to President Obama, to my colleagues and the American people," Daschle said. "I would hope that my mistake could be viewed in the context of 30 years of public service."