President Obama’s progress in filling out his cabinet took one step forward and one step back on Tuesday, as he nominated Sen. Judd Gregg (R-N.H.) as Commerce Secretary and as former Senate Majority Leader Tom Daschle withdrew his name for consideration as Health and Human Services Secretary.

Daschle withdrew from consideration at HHS after coming under fire for more than $100,000 in taxes he neglected to pay for the use of a car and driver over several years earlier this decade. He said in a statement that his experience in Washington has taught him that the leader of HHS needs the full confidence of the American people, and without distractions -- and he didn’t feel he would have that.

Obama said in a statement that “I accept the decision with sadness and regret.”

Gregg, 61 years old, said he would agree to take the Commerce position only if his replacement in Senate were a Republican, so as to deny the Democrats of a filibuster-proof majority of 60 senators. President Obama has become the first president in nearly a century to appoint three members of the opposing party to his cabinet.

Gregg has been a U.S. Senator from New Hampshire since 1993 and is a ranking member of the Senate Budget Committee.  He is known on Capitol Hill for his strict fiscal discipline and was the GOP’s chief negotiator for the $700 billion bailout of the financial industry.

“It is my goal to help the President put America back on the path to prosperity,” said Gregg in a statement following the nomination. 

President Obama said that although he and Gregg do not agree on everything, “he shares my deep-seated commitment to guaranteeing that our children inherit a future they can afford.”

Gregg agreed to the nomination after ensuring that Governor of New Hampshire, Democrat John Lynch, would appoint a republican as his Senate replacement so that the Democrat’s would not attain a three-fifths Senate majority.

The Governor agreed to the deal saying that, "it is important that President Obama be able to select the advisers he feels are necessary to help him address the challenges facing our nation."

Gregg was nominated as Commerce Secretary after the previous nominee, New Mexico’s Governor Bill Richardson, withdrew his name from consideration Jan. 4, due to a federal investigation involving state government contracts. Richardson denies the allegations, but said the investigation was taking longer than he had hoped and he wasn’t able to clear his name in time to serve in the Cabinet.

Also, President Obama’s pick as the first Chief Performance Officer, Nancy Killefer, withdrew her name for the post, citing a “personal tax issue” that created “distraction and delay.” She had allegedly failed to pay unemployment compensation taxes for household help.