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UPDATE - 1/22 6:00PM:
The New York Post now adds a few more elements to the confusion surrounding Caroline Kennedy's exit, reporting that Paterson never intended to pick her due to issues over taxes, her nanny and even the state of her marriage:
Kennedy was "mired in some potentially embarrassing personal issues," the source said, citing tax liabilities and worker compensation liabilities connected to the employment of a nanny.
"She has a tax problem that came up in the vetting and a potential nanny issue," the source said. "And reporters are starting to look at her marriage more closely," the source continued, refusing to provide any specifics.
UPDATE - 1/22: The New York Times reports that tax problems, not personal issues, may have derailed Kennedy's candidacy:
Problems involving taxes and a household employee surfaced during the vetting of Caroline Kennedy and derailed her candidacy for the Senate, a person close to Gov. David A. Paterson said on Thursday, in an account at odds with Ms. Kennedy's own description of her reasons for withdrawing.
UPDATE - 1/21 12:35PM:
Kennedy confirms her withdrawal after conflicting reports about whether or not she was still interested in the Senate seat, reports the AP:
Caroline Kennedy says she is dropping out of a bid to win appointment to the U.S. Senate seat once held by her slain uncle, Bobby Kennedy.
In a statement released early Thursday, she says she told Gov. David Paterson that she is abandoning her attempt to succeed Hillary Rodham Clinton for personal reasons.
UPDATE - 1/21 9:45PM:
Some of Kennedy's closest confidantes claimed to be unaware of her decision to drop out, reports The New York Daily News:
A family source said cousin Kerry Kennedy spoke with both Paterson and Caroline Kennedy's political consultant, Josh Isay, and neither was aware she was bowing out.
Paterson, the source said, told Kerry Kennedy "he hasn't heard it and he's made no decision that would provoke her to leave."
UPDATE - 1/21 8:00PM:
The New York Post is reporting that the real reason Caroline Kennedy withdrew her Senate seat bid was because she learned she wouldn't be picked by NY Governor David Paterson. The paper reports that her concerns over her uncle Ted Kennedy's health are not the main reason for her withdrawal:
Caroline Kennedy tonight withdrew her name from consideration to replace Hillary Clinton in the U.S. Senate after learning that Gov. David Paterson wasn't going to choose her, The Post has learned...
Sources said the reason Paterson had decided not to tap the daughter of John F. Kennedy was her poor performances in media interviews and in in private sessions with various officials.
UPDATE - 1/21: Caroline Kennedy is withdrawing her name from consideration for Hillary Clinton's vacant Senate seat.
Kennedy cited "personal reasons," according to the New York Post.
The New York Times elaborates that she was concerned about her uncle, Ted Kennedy, who suffered a seizure on Tuesday:
On Wednesday she called the governor, David Paterson, who is making the selection of who should succeed Senator Hillary Clinton. Her concerns about Senator Edward M. Kennedy's deteriorating health (he was hospitalized after a seizure during the inaugural lunch on Tuesday ) prompted her decision to withdraw, this person said. Coping with the health issues of her uncle, with whom she enjoys an extraordinarily close bond, was her most important priority; a situation not conducive to starting a high profile public job.
UPDATE - 1/02: Officials tell the AP that Caroline Kennedy will be New York's next senator.
UPDATE - 12/24: The New York Times reports that "Democratic officials" in New York are beginning to resist the idea of Caroline Kennedy being appointed to Hillary Clinton's Senate seat, "with Gov. David A. Paterson bristling over suggestions that her selection is inevitable, according to his advisers, and other leading Democrats concerned that she is too beholden to Mayor Michael R. Bloomberg."
The governor is frustrated and chagrined, the advisers said, because he believes that he extended Ms. Kennedy the chance to demonstrate her qualifications but that her operatives have exploited the opportunity to convey a sense that she is all but appointed already. He views this as an attempt to box him in, the advisers said.
"You have people going around saying, 'Oh yeah, it's a done deal,'" said one of the advisers, who requested anonymity because they were not authorized to speak publicly about the selection process and did not want to anger the governor. "The quickest way to not get something you want is to step into somebody's face."
As the Times notes, Bloomberg aides have apparently been actively pushing for Kennedy behind the scenes. One top labor leader said he received a call from top Bloomberg aide Kevin Sheekey saying that Kennedy was going to be the next senator from New York, "so get on board now."
That said, "It was not clear on Tuesday whether the governor's reaction would seriously damage Ms. Kennedy's chances to win the appointment or if it merely reflected Mr. Paterson's desire to regain control of the selection process after Ms. Kennedy's very public political debut."
More potentially bad press for Kennedy on Wednesday: "The Camelot heiress' net worth easily tops $100 million," a New York Daily News review found.
The former First Daughter is refusing to release financial information as she seeks to become New York's next senator, maintaining her family dynasty's longstanding practice of keeping its fortune tightly under wraps.
Public records paint a portrait of an enormously wealthy 51-year-old woman, whose dad, 35th President John F. Kennedy, is featured on the half-dollar coin.
Caroline's "crown jewel appears to be the 366-acre ocean-side estate on Martha's Vineyard passed down by her mother, Jacqueline Kennedy Onassis," and estimated to be worth $50 million to $75 million. She also oversees a large portion of JFK's share of a "massive family trust - with never-disclosed millions invested in real estate, gas and oil."
See a slideshow of Kennedy through the ages:
Caroline Kennedy, Gov. David Paterson, Kirsten Gillibrand... Click through to see Kennedy through the ages...
Kennedy stumping for Obama during a campaign rally in New Jersey in February 2008.
Caroline with her parents in 1960.
The Kennedy family on vacation around 1963.
The Kennedys on Easter Sunday in Palm Beach, 1963.
Upon graduating from Concord Academy in Massachusetts, 1975.
Jackie Kennedy Onassis, Caroline, and Edward at JFK Jr.'s graduation from Brown in 1983.
Kennedy and Edwin Schlossberg on their wedding day, July 19, 1986 in Centerville, Massachusetts.
The Kennedy siblings with architect I.M. Pei in 1996.
With President Clinton as he boards the "Mya" in Martha's Vineyard in August, 1997.
Presenting First Lady Hillary Clinton with the Arts Advocacy Award during the National Arts Awards in May, 1999.
Kennedy and husband Edwin Schlossberg leave their Manhattan apartment on their way to the Metropolitan Museum of Art's fund-raising gala for the exhibit "Jacqueline Kennedy: The White House Years, Selections From the John F. Kennedy Library and Museum" in April, 2001.
Kennedy after visiting the "Jacqueline Kennedy - The White House Years" in November, 2002.
At the Marc Jacobs Spring/Summer '06 show.
Caroline Kennedy receives the 2006 Platinum Quill award at the American Museum of Natural History in New York.
At the premiere of the Ken Burns World War II documentary "The War," at the Museum of Modern Art, September, 2007.
Arriving for the Kennedy Center Honors dinner at the State Department with Sen. Edward M. Kennedy, his wife Victoria, his sister Jean Kennedy Smith, George Stevens Jr., the founder and producer of the Kennedy Center Honors, and her husband Edwin Schlossberg, December, 2006.
With British Prime Minister Gordon Brown behind a bust of her father in April.
Waving to supporters after endorsing Obama at a rally in January, 2008. (Slideshow by Anya Strzemien)
UPDATE 12/10: The New York Observer endorses Kennedy:
As Governor David Paterson mulls a list of terrific candidates to fill Hillary Clinton's soon-to-be vacant Senate seat, near or at the top of that list should be Caroline Kennedy.
Ms. Kennedy's unexpected availability could make the governor's decision much easier. He's bound to alienate one group or another--perhaps several--if he chooses from among the pool of politicians already in office. While New York would be well represented by several of the potential would-be senators, none has the star power, magnetism and, let's face it, the magic of Caroline Kennedy.
UPDATE 12/9 The New York Times reports that Caroline Kennedy's uncle, Ted, has been working hard behind the scenes to have her appointed to Hillary Clinton's New York Senate seat:
While Caroline Kennedy is maintaining her public silence about whether she wishes to succeed Senator Hillary Clinton, her uncle, Senator Edward M. Kennedy of Massachusetts, has been working behind the scenes on her behalf, according to Democratic aides.
In recent days the Massachusetts senator has called Gov. David A. Paterson and Senator Charles E. Schumer, as well as Senator Robert Menendez of New Jersey, who took over last month as head of the Democratic Senatorial Campaign Committee when Mr. Schumer stepped down.
UPDATE 12/8: Sources close to Gov. Paterson say Caroline Kennedy's chances of replacing Hillary Clinton are slim, the New York Post reports:
The odds of Gov. Paterson choosing Caroline Kennedy to replace soon-to-be Secretary of State Hillary Rodham Clinton in the US Senate are no better than 20-1, a source close to the governor said yesterday.
The source was responding to news that Sen. Ted Kennedy, Robert F. Kennedy Jr. and other family members have been pushing hard for Caroline to replace Clinton. "It looks to me like [Caroline's cousin] Bobby Kennedy may be trying to push Caroline more than Caroline is pushing herself," a Paterson administration source told The Post.
UPDATE 12/7: The New York Post reports that Massachusetts Senator Ted Kennedy is lobbying for his niece Caroline.
Powerful senator and family patriarch Ted Kennedy has been working back channels to promote niece Caroline as the replacement for Hillary Rodham Clinton in the Senate, family sources told The Post.
The elder Kennedy (D-Mass.), who's battling brain cancer, has sent word to Gov. Paterson's office that Caroline Kennedy, 51, has contacts and family connections that would mean legislation affecting New York would receive prompt attention, family sources said.
UPDATE 6pm EST
AP is now reporting that Caroline Kennedy approached New York Governor Paterson about taking over Hillary Clinton's Senate seat. Earlier reports said she had talked to the Governor, but did not indicate her interest in the seat.
Read more from the AP and see an excerpt below:
Caroline Kennedy has spoken to New York Gov. David Paterson about the Senate seat that will come open when Hillary Rodham Clinton becomes secretary of state, according to a person familiar with the conversation.
Kennedy reached out to the governor to discuss the Senate seat, according to the Democratic source, who spoke on condition of anonymity because the conversation was private. The source would not disclose the details of the conversation.
ABC News reports that Hillary Clinton's Senate seat might be filled by none other than Caroline Kennedy:
Another Senator Kennedy? The crazy speculation about Hillary Clinton's Senate seat may not be so crazy after all. A Democrat who would know tells ABC News that New York governor David Paterson has talked to Caroline Kennedy about taking the seat, which was once held by her uncle, Robert F. Kennedy. It's not exactly shocking that Paterson would reach out to one of the most highly respected public figures in New York, but this is: Sources say Kennedy is considering it, and has not ruled out coming to Washington to replace Hillary Clinton in the Senate.
A few years ago, the famously private Caroline Kennedy would be the last Kennedy expected to serve in Congress, but of course, she took on a much more high-profile role during the presidential campaign and, if she does it, would be more than New York's junior Senator; she'd have closer ties to the Obama White House than any of her colleagues, a direct line to the East Wing.
Read more about Clinton's Senate seat.