Kennedy Is a Drop Out; Gov. Disputes Reason

Caroline Kennedy's abrupt announcement that she no longer wants to be appointed to Secretary of State Hillary Clinton's vacated Senate seat has touched off a political brawl between her supporters and the office of New York Gov. David Paterson.

Kennedy, the daughter of President John F. Kennedy, took Paterson and the rest of New York by surprise with her midnight announcement that she was withdrawing her name because of "personal reasons."

"I informed Gov. Paterson today that for personal reasons I am withdrawing my name from consideration for the United States Senate," she said in her statement.

Her supporters leaked to ABC News that Paterson wanted to make her New York's senator and had asked Kennedy to take 24 hours to reconsider. But a few hours later Kennedy issued her statement, ending her quest.

Caroline Kennedy

Kennedy's stunning departure from contention came on the day that Clinton was confirmed to be secretary of state, clearing the way for Paterson to choose a successor.

Apparently stung by Kennedy's about-face, sources described in various media as being close to Paterson did some leaking of their own: that Kennedy was forced to withdraw because she had a "tax problem and potential nanny issue."

Paterson's office countered today by telling the New York Times, New York Post and New York Daily News that the governor had no intention of making the daughter of Camelot a senator because vetting of Kennedy had turned up complications in her personal life. All three newspapers went online with their reports this afternoon.

Late today, Paterson's office issued a statement saying that the governor had not yet "informed any Senate candidates that they have not been selected, nor has any information gathered during this selection process created a necessity for any candidate to withdraw."

"Any speculation to the contrary is both inaccurate and inappropriate," read the statement.

Caroline Kennedy spokesman Stefan Friedman also released a statement this afternoon, reitering her reason for dropping out of the race.

"Caroline Kennedy withdrew her name for consideration from the United States Senate for personal reasons," wrote Friedman. "Any statements to the contrary are false."

"The governor set up a fair and deliberative selection process. This kind of mudslinging demeans that process and all those involved."

A Kennedy backer, speaking off the record, quickly told ABC News that the governor's office was wrong and that Kennedy did not have a tax or nanny problem.

Kennedy did not say anything in public, although she called several leading politicians today, including the powerful Assembly Speaker Sheldon Silver, to thank them for backing her candidacy. She did not, however, tell them why she backed out of consideration.

Paterson is scheduled to announce his Senate selection on Friday.

Biographer David Heymann said that it was no secret that Kennedy was the only city employee who declined to release her financial records when she began working at for the New York City Department of Education nearly five years ago.

"She was the only NYC employee – including the mayor – who never revealed her finances," said Heymann.

During the day, several versions of what happened Wednesday night emerged.

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