Feb. 2 (Bloomberg) -- Barack Obama said he “absolutely” stands behind Thomas A. Daschle, the president’s nominee for Health and Human Services Secretary who amended his U.S. tax returns Jan. 2 to pay $140,000 in back taxes and interest.

Daschle also won the support of Senate Finance Committee Chairman Max Baucus, a Montana Democrat, whose panel will meet today with the nominee. Daschle, a former Senate Democratic leader, also had been named by Obama to head a new White House Office of Health Reform and was viewed as the administration’s leading spokesman on its efforts to expand health coverage to more Americans and reduce medical costs.

Daschle, in a letter to the Finance Committee, said he was “deeply embarrassed” about his tax errors. He amended his 2005, 2006 and 2007 returns to add unreported consulting fees, unspecified charitable contributions and a car and driver provided by Leo Hindery Jr., founder of the private-equity firm InterMedia Advisors, a committee draft report said.

Daschle’s tax situation is a “serious but corrected mistake” that should be weighed against a three-decade career in public service, White House Press Secretary Robert Gibbs said today. Obama is “not insensitive” to the concerns raised by the tax issue, Gibbs said.

“The president also believes that Senator Daschle continues to be the right person for the very big job of making sure our health-care system works for every day Americans,” Gibbs said.

Obama made his comment earlier in a one-word response to a question from reporters at a White House event today.

Consider Explanation

Daschle’s nomination must be confirmed by the finance committee. Senator John Cornyn, a Republican from Texas who sits on the committee, said he was inclined to oppose Daschle’s nomination, although he voted to confirm Timothy Geithner as Treasury secretary last week. The Finance Committee grilled Geithner on his failure to pay almost $50,000 in taxes.

Daschle’s underpayment of taxes represented a “quantum leap” from Geithner’s failure, said Cornyn, who spoke before the committee was to meet with Daschle.

Cornyn said he was “open to some explanation, but I don’t really see exactly what that explanation could be that would satisfy my concerns on this point.”

Baucus, in an e-mailed statement today, said his “faith” in Daschle’s “dedication and qualifications has only been bolstered in recent weeks by our numerous conversations about the pressing need for comprehensive health-care reform.”

Baucus ‘Eager to Move’

“The ability to advance meaningful health reform is my top priority in confirming a Secretary of Health and Human Services, and I remain convinced that Senator Daschle would be an invaluable and expert partner in this effort,” Baucus said in the statement. “I am eager to move forward together.”

Daschle, 61, was aware in June that his free use of a car service might be taxable, according to the draft report to the Finance Committee. His letter to the committee said the corrections were made voluntarily.

“I apologize for the errors and profoundly regret that you have had to devote time to them,” Daschle said in the letter sent to Baucus and the committee’s ranking Republican, Senator Charles Grassley of Iowa. “I will be happy to answer any committee members’ questions about these issues.”

Daschle’s accountant decided in December that Daschle’s tax returns had to reflect use of the car, after the presidential vetting team raised the question of whether certain charitable donations were deductible, Daschle wrote in the letter.

“When my accountant realized I would need to file amended returns, he suggested addressing another matter I had raised with him earlier in the year: whether the use of a car service offered to me by a close friend might be a tax issue,” Daschle wrote. “In December, my accountant advised me that it should be reported as imputed income in the amended returns.”

‘Leading Architect’

Daschle also hadn’t reported a May 2007 consulting payment of $83,333 from InterMedia, which paid him that amount each month. The tax forms provided to Daschle by InterMedia for 2007 didn’t include the payment because the money was transferred by a different method that month by a temporary clerk, InterMedia officials told the committee.

Obama chose Daschle on Dec. 11, saying he would be a “leading architect” of efforts to revamp the U.S. health-care system. Daschle told the committee staff that in June “something made him think that the car service might be taxable,” the staff report said.

To contact the reporters on this story: Aliza Marcus in Washington at amarcus8@bloomberg.net; Edwin Chen in Washington at Echen32@bloomberg.net

Last Updated: February 2, 2009 17:49 EST