George Stephanopoulos’s Buddy Rahm Emanuel in Possible Tax Trouble; Will ABC Viewers Learn What George Knows?

The Washington Times and New York Daily News, among other news outlets, have reported that, as a member of Congress, White House Chief of Staff Rahm Emanuel received rent-free accommodations from Representative Rosa DeLauro for five years, raising the question of whether Emanuel properly complied with gift rules for House members and whether he should have paid taxes on the imputed income of the gift.

Last summer, liberals went after Republican Senator Norm Coleman for paying an allegedly below-market rate for his Capitol Hill apartment, with the George Soros-funded Citizens for Responsibility and Ethics in Washington (CREW) demanding an ethics committee investigation.

The big media bias question regarding Emanuel is whether his longtime friend, ABC chief Washington correspondent and host of This Week George Stephanopoulos, knew about the arrangement with DeLauro and her husband, pollster Stan Greenberg — who worked alongside Emanuel and Stephanopoulos in the 1992 Clinton campaign.

The Politico recently reported that Stephanopoulos and Emanuel exchange daily phone calls with themselves and two other veterans of the 1992 Clinton campaign “war room,” Paul Begala and James Carville, with Greenberg (the “fifth Beatle”) often joining in. “In any given news cycle, it is quite likely that Washington’s prevailing political and media interpretation — at least on the Democratic side — is being hatched on these calls,” Politico’s John Harris reported.

Back on December 21, Stephanopoulos was first to report that his friend Rahm had been cleared by his colleagues at the Obama transition office (no outside investigation required?) in the matter of Emanuel’s contacts with then-Illinois Governor Rod Blagojevich’s office about the Senate seat that Blagojevich was later impeached over attempting to sell to the highest bidder.

Stephanopoulos broke the news during the roundtable discussion on his This Week, December 21:

GEORGE STEPHANOPOULOS: I've been briefed on the review that Obama has done and the sources I talk to say that what it will show is that there were actually far less contacts than we had heard, that Rahm Emanuel only had one phone call with Governor Blagojevich. It wasn't even really about the Senate seat. Four phone calls with the chief of staff where Emanuel was pushing the idea of Valerie Jarrett, who was the aide to Obama as the senator, but according to these sources, absolutely no deals and was clear that they did not think-
SAM DONALDSON: But was one suggested by-
STEPHANOPOULOS: The only thing I learned on that is that at some point John Harris, the chief of staff, said to-
DONALDSON: Yeah, who's resigned now.
STEPHANOPOULOS: -who resigned now, said to Emanuel, but if we pick her, all we get back is appreciation, right?
STEPHANOPOULOS: And Rahm says, right.
ROBERTS: So basically...
DONALDSON: Rahm is off the hook if that's the case.

Stephanopoulos also posted the news in an “Exclusive” that same morning to his “Bottom Line” blog at ABC News:

Sources tell me that the Obama team's review of contacts with Illinois Gov. Rod Blagojevich will show that Rahm Emanuel had only one phone conversation with Blagojevich.

The contact, described as a "pro-forma" courtesy call, came as Emanuel was named Chief of Staff for Obama.  Most of the discussion concerned Emanuel's Congressional seat (which had previously been held by Blagojevich), with only a "passing reference" to the Senate vacancy, according to these sources.  No deal for the Senate vacancy was discussed....

The sources add that the report will show Emanuel also had four phone calls with Blagojevich Chief of Staff John Harris....Sources also confirm that Emanuel made the case for picking Obama confidante Valerie Jarrett during at least one of the conversations.  In the course of that conversation, Harris asked if in return for picking Jarrett, "all we get is appreciation, right?"  "Right," Emanuel responded.

Now, with suggestions that Emanuel’s receipt of free rent from Greenberg and DeLauro puts him in a similar position as failed HHS nominee Tom Daschle — failing to report and pay taxes on non-monetary income — the question is what Stephanopoulos, as a longtime friend of Emanuel and Greenberg, knew about the free rent deal, and whether the chief Washington correspondent for ABC News realized there was a potential problem for Emanuel.

Tuesday’s Washington Times “Inside Politics” column cited an item at Commentary magazine:

"Amazing. Yet another Obama appointee apparently has tax problems. Pardon me, usher, but I think I’ve seen this movie before," J.G. Thayer writes at

"This time it's White House Chief of Staff Rahm Emanuel. It appears that the former congressman found a handy way to save money. Most members of Congress find themselves having to support two households - one in their home district, and one in or around DC. Some members, in the past, have ended up sharing apartments or town houses. Emanuel took that one step further: he moved into the home of his colleague, Rosa DeLauro (D-Conn.), staying there for five years. Rent-free," the writer said.

"To most people, this is 'imputed income' - non-financial gifts or compensation that should be reported to the IRS. Emanuel and DeLauro defend their conduct by saying that House ethics rules permit 'hospitality between colleagues.'”

But last year, there were questions about a sweetheart deal between Republican Senator Norm Coleman and his GOP activist landlord, Jeff Larson, because the rent was only $600 per month and Coleman at one point owed Larson back rent for two months. The National Journal played that arrangement as fishy in a lengthy June 28, 2008 article:

In July 2007, Coleman began paying Larson $600 a month in rent for a portion of a one-bedroom basement apartment in a Capitol Hill town house that Larson owns. The way Coleman explained the arrangement, the apartment serves as a crash pad. The 58-year-old senator sleeps in a bed shoehorned into a 10-by-10 bedroom, and he said he spends perhaps only "three waking hours a night" in the place.

Earlier this month, after National Journal questioned Coleman and Larson about the living arrangement, the senator said he discovered that his rent for last November and January had not been paid. In mid-June, Coleman covered the back rent with a personal check for $1,200 made out to Larson and signed by the senator's wife. Last year, Coleman sold furniture to Larson to cover one month's rent, according to Larson. And Larson held on to yet another month's rent check for three months, cashing it a few days after NJ's inquiries....

Coleman and Larson have had a rather loose arrangement when it comes to the senator's monthly $600 rent payments. Copies of the checks they provided to National Journal showed that the checks were often written nine or more days after the first of the month. Larson didn't cash a check written on March 10 until June 17--after NJ questioned Coleman and Larson about their arrangement.

To cover one month's rent, Coleman sold Larson a couch, a table and chairs, and a desk from his old apartment. How did they determine that the furniture was worth $600? Larson: "We just looked at it, estimated it was $600 and one month's rent. We were always conflicted--if it was too high, somebody would say it's not worth that much. We erred on the side of taking one month's rent, valued at $600."

In addition, neither man could find checks from Coleman for two months' rent. In a statement issued to NJ, Coleman said that, in reviewing his records, "it's clear that two months of rent were not paid." He said he took "full responsibility for that, and the situation has been remedied with a personal check" to Larson for $1,200. "This will not happen again."...

He insisted that Larson hadn't given him a special deal. Coleman said that before taking the place, he had consulted colleagues in Congress who rent rooms, and they, too, paid "600 bucks" a month in rent. "I went from having a place with a swimming pool and 24-hour service to literally a bedroom," Coleman told National Journal. "But that's all I need. Some of my colleagues live in their office."

After the National Journal article appeared, the self-styled Citizens for Responsibility and Ethics in Washington demanded an ethics investigation “into whether Senator Norm Coleman (R-MN) violated the Senate gifts rule by accepting lodging from Republican operative Jeff Larson....CREW is asking the Senate Ethics Committee to look into whether or not Sen. Coleman is paying fair market value for the apartment.”

The press release quoted CREW’s executive director Melanie Sloan: “Few Americans have landlords who sometimes fail to cash their rent checks, ignore unpaid rent, or accept furniture in lieu of rent. That Sen. Coleman has just such a landlord, who also happens to financially benefit from his relationship with the senator creates exactly the sort of appearance of impropriety that undermines the public’s faith in government. Senators must abide by the ethics rules at all times, not just when they get caught flouting them.”

It may turn out that Emanuel’s free rent arrangement does not conflict with House gift rules and is not an issue for the IRS. But if George Stephanopoulos had discovered that a top House Republican was accepting such a gift, would he find it worth investigating? And would he share his knowledge with ABC News viewers?

Rich Noyes
Rich Noyes
Rich Noyes is the Senior Editor for Newsbusters