Trump's wealthy picks for Cabinet to undergo scrutiny he didn't face

WASHINGTON — For the billionaires, the multimillionaires and the plain well-off people whom President-elect Donald Trump is choosing for his Cabinet, the first step to office will be the sort of grilling he didn't face — on potential business conflicts of interest and, for some, tax returns — courtesy of the Senate sleuths who have taken their toll in the past.

President Barack Obama's first Treasury secretary, Timothy F. Geithner, was nearly derailed in 2009. His first choice for secretary of health and human services, Tom Daschle, did not make it through that year.

Now billionaires Betsy DeVos, Linda McMahon and Wilbur L. Ross Jr., and multimillionaires Rex W. Tillerson, Ben Carson, Elaine Chao, Steven Mnuchin, Rep. Tom Price, Andrew F. Puzder and Todd Ricketts can expect much of the same scrutiny.

"With the president-elect flouting a 40-year bipartisan tradition of disclosure and transparency, we think it's more important than ever to ensure that senior officials across government aren't operating under a different tax code than everyone else," warned Sen. Ron Wyden of Oregon, the senior Democrat on the Senate Finance Committee, which has upended its share of nominees.

After nearly two centuries in which Senate reviews were cursory at best, that confirmation process has become increasingly arduous, regardless of party, and especially in the committees that require nominees' tax returns.

Dean Zerbe, a former counsel to the Finance Committee, had some advice for Trump's nominees facing that panel: Do not copy the president-elect's defiance on disclosure. "The committee will say, 'Bless your heart. Now send us your tax returns,'" Zerbe said.

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Senate Democrats will be pressing in January to make the scrutiny even broader. They propose that all committees make nominees privately submit their three most recent federal tax returns. Three committees — Finance, Budget, and Homeland Security and Governmental Affairs — already do so. Together they have responsibility for examining five Cabinet-level officials before confirmation: the secretaries of Treasury, health and human services, and homeland security, and the president's trade representative and budget director.

For Democrats, the tax-disclosure proposal is a way to underscore Trump's refusal to release his returns, despite a four-decade tradition of presidential candidates doing so. More to the point, they will have ample opportunity to press home their contention that a number of his Cabinet choices have wealth and backgrounds at odds with his populist pitch.

"He is building an administration that looks a whole lot like himself," said Sen. Patty Murray of Washington, the senior Democrat on the committee that will handle the nominations of DeVos, who married into the Amway fortune, as education secretary, and Puzder, a fast-food executive, to be labor secretary.

Those nominations will go to a committee that has not previously required nominees to file tax returns along with other financial disclosures. So will those of Tillerson, chief executive of Exxon Mobil; Ross, an investment titan chosen for secretary of commerce; Trump's choice for deputy commerce secretary, Ricketts, the heir to the Ameritrade fortune; the pick for transportation secretary, Chao, a wealthy former labor secretary and the wife of the majority leader, Sen. Mitch McConnell of Kentucky; Carson, a retired neurosurgeon; and McMahon, a billionaire professional wrestling impresario, who was picked to lead the Small Business Administration.

The Finance Committee chairman, Sen. Orrin Hatch, R-Utah, has served notice that Trump nominees "will undergo the same bipartisan vetting process as the nominees from previous administrations," and will not get a public hearing until the committee staff's private examination — including a review of the nominees' tax returns from the past three years — is complete.

The Finance Committee considers nominees to three Cabinet-level offices (Treasury, trade, and health and human services), while other committees have jurisdiction over one or two. So far Trump has made his selections for two of the three spots: Price, R-Ga., an orthopedic surgeon, to be secretary of health and human services; and Mnuchin, a former Goldman Sachs partner turned hedge fund operator and Hollywood financier, to be Treasury secretary.

For the very wealthy Mnuchin especially, the multipage questionnaire that the Finance Committee uses for its review illustrates the hoops a nominee must jump through to pass muster. It includes listing all jobs held since college, all business relationships, political activities and contributions, any legal or ethics issues, and a precise accounting of financial net worth for the nominee, a spouse and dependents. Nominees must answer whether they have paid all local, state and federal taxes, including those for household employees — a common tripwire.

To gauge potential conflicts of interest, the questionnaire also asks for "any investments, obligations, liabilities or other relationships" and any business dealings and lobbying activities in the past 10 years that could be problems, as well as for an explanation of how those potential conflicts will be resolved. Separate opinions are required from both the federal Office of Government Ethics and the ethics officer of the agency a nominee would lead.

Even as Trump resists a complete break with his far-flung businesses, a nominee before the Finance Committee must answer whether he or she, if confirmed, will "sever all connections with your present employers, business firms, associations or organizations." If not, the nominee must provide details of how those connections will be handled.

The questionnaire must be notarized — providing false answers is potentially a federal crime — and the nominee's tax returns attached. The documents are not made public, though information may come out in hearings or be leaked, often by senators. Neither Daschle's nor Geithner's tax returns were made public, but their offenses were widely aired.

When Senate aides discover problems, a nominee is given a choice: Agree to a public report on the infraction and pay all taxes, penalties and interest, or quietly withdraw.

"Those are the not-very-attractive options a nominee was given," said Mark Patterson, a Democrat who was the staff director for the Finance Committee in the late 1990s and the chief of staff at the Treasury Department from 2009-13.

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Zerbe, who was on the staff of the Finance Committee during most of President George W. Bush's administration, recalled of a few sub-Cabinet nominees: "They'd fade away so as not to be embarrassed." He said common transgressions included taking questionable deductions for home-office expenses.

But high-level nominees often cannot escape embarrassment.

Daschle, a former Senate Democratic majority leader who was a member of the Finance Committee, withdrew his nomination in early 2009 after it was revealed that he had to pay $140,167 in back taxes and interest for infractions including improper deductions and failing to report as income a chauffeur-driven car that an employer had made available.

At the same time, Geithner won confirmation though he was found to have failed to pay payroll taxes during three years at the International Monetary Fund, which as an international organization did not withhold taxes for employees as domestic employers do. Lael Brainard, now a Federal Reserve governor, waited more than a year to be confirmed as Treasury undersecretary for international affairs while she and the Finance Committee haggled over discrepancies in her tax returns.

Such close scrutiny of nominees, now taken for granted, is relatively recent in the history of the Senate's exercise of its constitutional confirmation power.

Not until the 1950s is there evidence of committees examining a president's picks, Betty K. Koed, the Senate historian, said. The first record of a committee hearing on a nominee was in 1953: In just over an hour, steel magnate George Humphrey, the sole witness, answered questions about his stock holdings and went on to be confirmed as Treasury secretary two days later.

Starting in 1981, the Finance Committee began receiving reports on nominees from the FBI and the new Office of Government Ethics. Eventually it became the first panel to require nominees' tax returns.