Rep. Mick Mulvaney said Tuesday he failed to pay federal taxes for his children’s nanny because he did not view the woman as a household employee — an explanation that came after Democrats have argued that the lapse should prevent him from serving as Donald Trump’s director of Office of Management and Budget.
“In 2000, we had triplets. When they came home, we hired someone to help my wife take care of the children. In our minds, she was a babysitter. She did not live with us. She did not spend the night there,” the South Carolina Republican told the Senate Budget Committee at a confirmation hearing. “She did not cook. She did not clean. She did not educate the children, she helped my wife with the kids.”
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Mulvaney said he did not think of the nanny again until two days after President Donald Trump announced his nomination and after Trump’s transition team sent him a questionnaire, which included a question about household employees. He then realized that he should have paid taxes, he said, and immediately told the transition team and Trump. He also notified the Senate and met with his accountant to begin the paperwork to pay the more than $15,000 in federal taxes and fees. State taxes and any penalties have yet to be determined.
Senate Democrats, including Minority Leader Chuck Schumer, have said the lapse is disqualifying, as it has been for previous Democratic nominees. Republicans, who can confirm Mulvaney on their own, have not withdrawn their support.
At a later hearing, Sen. Claire McCaskill, the top Democrat on the Senate Homeland Security and Governmental Affairs Committee, expressed concern that Mulvaney’s hearing was held before the FBI submitted its background check of Mulvaney. “This is evidence of a rushed process,” McCaskill said.
McCaskill asked for and received a commitment from Chairman Ron Johnson that the committee would not vote on Mulvaney’s nomination until the FBI completes the review.
Mulvaney also came under fire from Democrats for backing major overhauls of Social Security and Medicare — which conflict with Trump’s promises not to touch the popular entitlement programs.
“One of the cornerstones of his campaign was that he was not going to cut Social Security, Medicare and Medicaid. And he wasn’t ambiguous about this,” said Sen. Bernie Sanders, the ranking member of the Budget Committee. Sanders asked Mulvaney if he would tell the president to keep his word.
“The only thing I know how to do is to tell the president the truth,” Mulvaney said, adding that without changes, the programs’ solvency will be threatened in the coming years. He told senators that he would support raising the retirement age for Social Security and adopting further means-testing for Medicare. He has also supported Speaker Paul Ryan’s Medicare premium support proposal, which critics call a move to “voucherize” Medicare.
Mulvaney emphasized that any changes to the programs should only affect future generations, not those currently receiving benefits. But Democrats were not mollified.
“The alarm bells should be going off right now” for tens of millions of seniors, said Sen. Debbie Stabenow (D-Mich.).
Mulvaney faced his toughest grilling from Sen. John McCain (R-Ariz.), who aggressively challenged the nominee over his votes to cut defense spending and withdraw troops from Europe and Afghanistan.
“Don’t you know where 9/11 came from?” McCain asked at one point at the Senate Homeland Security and Governmental Affairs committee.
The defense hawk said he was “deeply concerned” about Mulvaney’s nomination and ripped Mulvaney for saying he couldn’t recall some of his voting record. “I think I would remember if I was withdrawing troops from Europe,” McCain said.
McCain also slammed Mulvaney for trying to shrink the Overseas Contingency Operations account, which is intended to pay for wars abroad but has been used as a way to get around strict spending caps. After the hearing, McCain said he had not decided whether he would vote for Mulvaney. Asked whether he was satisfied with Mulvaney’s answers, an angry McCain deadpanned, “You could tell, just totally.”
Earlier in the day, Mulvaney offered several olive branches to Pentagon boosters, including saying he supports Trump’s plans to increase defense spending.
On taxes, Mulvaney suggested he would no longer be bound by the influential Americans for Tax Reform pledge that prohibits any tax increase if he joins the White House.
“I fully recognize, accept and welcome the fact that I am changing from representing 750,000 people back home to advising the president of the United States,” Mulvaney said. Asked whether Republican plans to overhaul the tax code should be revenue-neutral, he said he would urge Trump to consider the overall effects on the economy and and economic growth.
Democrats frequently slammed Mulvaney for promoting budget brinkmanship as a founding member of the hard-line House Freedom Caucus. He previously downplayed the consequences of a debt ceiling breach during the 2011 debt limit fight and supported a failed Republican bid to defund Obamacare that led to a two-week government shutdown in October 2013.
Mulvaney promised to work on a bipartisan basis if confirmed and said he would counsel Trump on the ramifications of raising the debt ceiling and not raising it. Failure to increase the government’s borrowing capacity could lead to a U.S. default and global financial crisis.