Killefer also withdraws over tax problems

Nancy Killefer was chosen as deputy budget director.

WASHINGTON - Nancy Killefer withdrew her candidacy yesterday to be White House deputy budget director, with responsibility for rooting out waste throughout the federal government, saying she didn't want her bungling of payroll taxes on her household help to become a distraction for the Obama administration.

In a brief letter to Obama, the 55-year-old executive with consulting giant McKinsey & Co. wrote that she had "come to realize in the current environment that my personal tax issue of DC unemployment tax could be used to create exactly the kind of distraction and delay" that must be avoided in responding to urgent economic problems.

She offered no further details of her tax difficulties. White House spokesman Tommy Vietor said simply, "Nancy Killefer has decided to withdraw her nomination, and we accepted her withdrawal."

When Killefer's selection was announced by Obama on Jan. 7, the Associated Press disclosed that in 2005 the District of Columbia government had filed a $946.69 tax lien on her home for failure to pay unemployment compensation tax on household help.

Since then, administration officials have declined to answer questions about the tax error, which she resolved five months after the lien was filed.

It wasn't clear whether the administration was aware of Killefer's tax errors before Obama named her.

On paper, Killefer brought impressive credentials to the two jobs Obama selected her for: deputy director for management at the Office of Management and Budget, which requires Senate confirmation, and a new White House post, chief performance officer for the entire federal government, which does not require confirmation.

Her nomination was never formally sent to Congress.