McConnell: "Wait-And-See" On Daschle

The Senate's leading Republican said he is taking a wait-and-see attitude toward the revelation that former Senator Tom Daschle - named to a cabinet post by President Obama - recently filed an amended tax return and paid $140,000 in back taxes and interest.

Appearing on CBS' Face The Nation, Sen. Mitch McConnell, R-Ky., refused to say whether he thinks Daschle's nomination as Secretary of Health and Human Services is in trouble, but admitted news of Daschle tax troubles was "a surprise."

"The Senate Finance Committee is meeting tomorrow to go over this and to come up with recommendations for the rest of us," he told host Bob Schieffer. "And I think I'm going to just wait until they give me their opinion."

Regardless of the embarrassment over the news (and what it says for the Cabinet vetting process, given the recent withdrawal of New Mexico Governor Bill Richardson after being named for Commerce), the opinion seems to be that Daschle - who is popular in Washington - would not fail to be confirmed.

Sen. Chuck Schumer, D-N.Y., the vice chairman of the Democratic Conference, said Daschle's tax problem is less important than his serving in the Obama administration. "This was clearly an oversight," Schumer told Schieffer. "He's made recompense. He's admitted it.

"Daschle is one of the most respected people, and particularly in health care. He knows the health care issue. He knows the senators. He knows the politics. At a time when we have to really dramatically overhaul health care because people are hurting, I think we need Daschle as secretary of HHS. … And I believe that he will be approved by both the Finance Committee and the whole Senate."

New York Times columnist David Brooks said that Daschle, being a popular member of "the club," will survive the revelation and be confirmed.

"People like him, people respect him, in general," Brooks said.

Schieffer admitted that some in the Senate have told him, "If he were not in the club, had he not been a member of the Senate, he probably would be dead meat right now."

However, Brooks noted a potential problem for Daschle's fellow Democrats:

"He gave money to 14 senators. It's going to be hard for those senators - I assume they're all Democrats - to vote for him because it will look like, 'Oh, he gave them money, so of course they voted for him.'

"Barack Obama apparently joked last night that he was slow to pick his Labradoodle for his daughters because the dog he picked owed some back taxes."

Tongue-in-cheek, Brooks suggested the president was onto a winning formula for closing the nation's budget deficit: "He names someone. We get some money from the IRS in back taxes. We're making a lot of money off this!"

Stimulus Battle

The senators differed on their appraisal of the economic stimulus bill's chances for passage in the Senate, at least in its present form. However, Schumer was more optimistic that a bill will pass %#0151; and warned against watering down the package (for example, with additional tax cuts) just to win votes, that it will lose its effectiveness.

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Schumer expects there will be an increase in infrastructure spending, particularly in transportation. He also thinks the bill can do more in terms of housing, such as raising the tax credit for new home buyers or lowering mortgage interest rates to spur refinancing, in order to help lower consumers' monthly mortgage bills. However, he felt it would be more appropriate to distribute money for housing from the TARP funds.

Following last week's House passage of the stimulus bill, in which not a single Republican voted for it, McConnell said there is a great deal of unease within the Senate about the bill which will spur changes now that it is in their lap.

"The president said he didn't think it ought to have earmarks in it," McConnell said. "And you know, earmarks are arguably fine in a normal appropriations process, but what does that have to do with stimulating the economy? We ought to go right at the housing problem and right at tax relief to put money in the hands of consumers who can spend it now.

"I think we need to exercise some discipline here," he said. "And I think it may be time, Bob, for the president to kind of get a hold of these Democrats in the Senate and the House, who have rather significant majorities, and shake them a little bit and say, 'Look, let's do this the right way.'

"I can't believe that the president isn't embarrassed about the products that have been produced so far," McConnell said, mentioning provisions of $600 million for purchases of new cars for federal employees and $150 million for honeybee insurance. "This is nonsense," McConnell said.

"Well, I mean, the auto industry sure needs some help," Schieffer said.

"I doubt if the government buying $600 million worth of automobiles would provide the kind of stimulus that we're talking about here," McConnell said. "And we certainly don't need honeybee insurance. Look, this thing needs to be targeted right at the problem, if we're going to spend this enormous amount of money.

"Someone said the other day that, if you started the day Jesus Christ was born and spent $1 million every day since then, you still wouldn't have spent $1 trillion."

McConnell would not say whether Republicans would filibuster the bill if it were not to their liking. But, Schieffer asked, if the bill fails to pass, "wouldn't Republicans be blamed when the economy is going down the tubes? I mean, that kind of thing didn't work very well for Herbert Hoover. He didn't want to do anything, either."

"He did a lot - he did a lot of the wrong things. But this is not about blame. This is about getting the economy moving. We don't have an election for two years.

"Virtually everybody agrees we ought to do something," McConnell said. "This is not a question of doing nothing versus doing this."

Schumer warned, however, that fights over where funds are allocated could be a diversion for critics, and could actually stall help, leading to a deflationary spiral. "You know when the last one we had was? It was called the Great Depression. So this is serious, serious stuff."

"Most of the Republicans say, we just want more tax cuts," Schumer said. "Even Martin Feldstein, the leading Reagan Republican economist, says, no, the tax cuts are not the way to go. And we did tax cuts with George Bush a year ago. We went along completely because Bush was president. There was no spending in there, not even unemployment insurance. And it was regarded as a flop.

"So let's not repeat history. Let's do something new. President Obama has put together a very strong package. Can we make it better? Of course we can make better the bill that came over from the House, and we will. But we must do something. And it's no time for partisan games."

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"Either in the Obama White House or in the House … they added on a whole bunch of permanent things, to entitlements, to Head Start programs, to health care. There's a lot of opposition, both in the Republican Party and, frankly, I've spoken to a lot of moderate Democrats who are anguished about this. Why did we stick Head Start in here? Why did we stick all this health care stuff in here?

"I mean, I understand why they want to do it. You've got this train leaving the station, you can fund it all with deficits, so they threw it in there."

"It almost makes you wonder if there's, kind of, a fix in here," Schieffer said, "that you put a bunch of stuff in the House bill, so you'd have some things you could take out when it got to the Senate. And then everybody could say they made their point, and in the end, you pass this bill."

"Well, you think they're smarter than I do," Brooks said.

Brooks said that the Democrats and the Obama administration should get behind the Republican idea of lowering mortgage rates to 4.5 percent. "I don't know if that's a good or bad idea, but if they're thinking about big things in the housing front and on the banking front, then that's going to really create a bipartisan spirit that we actually don't see, right now, on the stimulus bill.

"I think we heard bipartisan agreement on the general outlines of the focus: more infrastructure but especially more tax cuts for the lower and middle class. Senator McConnell talked about it. The Democrats are certainly open to that, and maybe a payroll tax cut. And so the tax cuts which have come down to about 22 percent of the whole package, way down, really are immediate. They may not be as effective as, maybe, some other things, but they're immediate. And the speed is really what's important."

By CBSNews.com producer David Morgan.