My second guess was that, with her Uncle Ted in serious decline, that she was opting instead to take the Kennedy seat in the Senate. We are, after all, a whisker's width from instituting our version of the House of Lords -- inherited seats, family seats in government. Kennedy, Murkowski, Stevens, Boggs, Clinton, Bush, and on.
Here's an excerpt from the Times:
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.
The account emerged 14 hours after Ms. Kennedy announced that she was taking her name out of contention for the Senate seat vacated by Hillary Rodham Clinton, and as Mr. Paterson, according to two well-placed Democrats told of his thinking, was leaning toward selecting Representative Kirsten E. Gillibrand, an upstate lawmaker in her second term in Congress. Mr. Paterson has scheduled a news conference at noon Friday in Albany to announce his choice.
Hard feelings toward Ms. Kennedy were clearly building among the governor’s staff on Thursday, after a dramatic evening in which she was reported to be dropping out, then wavering, then ultimately, shortly after midnight on Thursday, issuing a statement ending her candidacy.
The person close to the governor said Mr. Paterson “never had any intention of picking Kennedy” because he had come to consider her unready for the job. The person did not describe the exact nature or seriousness of the tax and household employee issues.
But other Democratic operatives and people who talked to the governor disputed that account, and said that he had all but decided to select Ms. Kennedy as senator, and that his staff was arranging a press conference for late this week.