State Department spokeswoman Heather Nauert said Saturday she has withdrawn from consideration as UN ambassador.
President Donald Trump had previously announced he was picking Nauert, but the formal nomination had not been sent to the Senate.
"I am grateful to President Trump and Secretary Pompeo for the trust they placed in me for considering me for the position of US Ambassador to the United Nations. However, the past two months have been grueling for my family and therefore it is in the best interest of my family that I withdraw my name from consideration. Serving in the Administration for the past two years has been one of the highest honors of my life and I will always be grateful to the President, the Secretary, and my colleagues at the State Department for their support," Nauert said in a statement from the State Department.
The State Department said Trump will make an announcement about a new nominee soon.
Before she joined the State Department, Nauert employed a nanny who was in the United States legally but was not legally allowed to work, a source familiar with the matter and an administration official told CNN. The nanny wasn't paying taxes while she worked, the sources said. This was not known when Nauert became the State Department spokeswoman, but she did tell officials when she was offered the United Nations ambassadorship, the sources said.
Nauert disclosed the nanny when she filled out the paperwork for the UN position, a source close to Nauert who was helping prepare her for the nomination told CNN's Kylie Atwood. When it became apparent in the past week that it would be an issue, Nauert decided to step away because "she was not aware of how tough it was going to make it."
Nauert became State Department spokeswoman in April 2017.
Officials thought they could get through the controversy since the back taxes were paid, but in the end, Nauert agreed she should withdraw, the sources said.
CNN has reached out to Nauert regarding the nanny issue as well as generally about her withdrawal but has not heard back.
Trump also announced Nauert as his pick December 7, before the White House did a thorough vet of her, sources told CNN. Nauert's Office of Government Ethics paperwork hadn't even gotten through review until well after Trump tweeted that he would nominate her.
Some White House officials were surprised by her withdrawal. They had been pressed for why she had not been formally nominated, but several assumed it was just bureaucratic holdup. This was not expected -- and one official noted she had been responding to emails in her official capacity as State Department spokesman recently.
Nauert is not expected to return to her State Department job, a source with knowledge of the matter told CNN's Jamie Gangel.
Last month, CNN reported there was a lack of urgency on getting her quickly confirmed. That came from all stakeholders: the White House, Capitol Hill, and the United Nations. The White House initially blamed the slowdown of her formal nomination on the shutdown, but when the government re-opened, they would not say that getting her officially nominated was a priority.
Months after Trump's announcement of his pick, the nomination still had not been made official and there were no dates set for a Senate confirmation hearing.
Multiple sources told CNN they felt that was a sign of trouble for her.
The President is already considering other candidates, the sources told CNN.
Some of those under consideration, who were also part of the original list of potential candidates, include Ric Grennell, the US ambassador to Germany; Jamie McCourt, the US ambassador to France; and Kelly Craft, the US ambassador to Canada, according to people familiar with the matter.
The plan was to degrade the position to one that fell under the secretary of state -- meaning not being in cabinet-level meetings. It is unclear whether the White House will change its initial thinking on downgrading the prestige of the job.
Secretary of State Mike Pompeo said in a statement from the State Department, "Heather Nauert has performed her duties as a senior member of my team with unequalled excellence. Her personal decision today to withdraw her name from consideration to become the nominee for United States Ambassador to the United Nations is a decision for which I have great respect.
"I wish Heather nothing but the best in all of her future endeavors," Pompeo continued, "and know that she will continue to be a great representative of this nation in whatever role she finds herself."
There were concerns that Nauert would be face a difficult confirmation process, several sources familiar with the matter had told CNN.
"There have been predictions of a stormy ride in confirmation, with many on the Hill saying this was a job done by Henry Cabot Lodge, Madeleine Albright, Daniel Moynihan, Jeane Kirkpatrick, Richard Holbrooke, Bill Richardson ... and now a Fox News presenter?" a senior diplomatic source told CNN.
CNN's KFile reported last week that Nauert once hosted a panel on unfounded conspiracy theories that Islamic fundamentalists are secretly trying to destroy America by imposing Sharia law. In 2009, Nauert hosted an hour-long Fox News special webcast titled "Terror from Within," which featured anti-Muslim activists. Nauert at the time introduced the program as exploring "a school of thought that there is a stealthy jihad taking place within the US. And the theory is that some in our country want to destroy our America from within."
They would destroy America, Nauert continued, "by using our own legal system against us, by undermining our financial system and even taking away our holidays. The fact that we are a PC, politically correct country, well, that will only be used against us."
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