What is the most accurate name for the effect where people find excuses for flaws by leaders?
Confirmation bias is certainly at play here, but I'd narrow that down a bit. It doesn't have a Wikipedia page (yet) but Dan Kahan has been focusing on a variation of motivated reason he calls "Identity-protective cognition". (See Misconceptions, Misinformation, and the Logic of Identity-protective Cognition for a full discussion.)

Confirmation bias can creep in under many circumstances, but we have an especially strong motivation (very often non-conscious) to promote arguments which align with our own self-identity. The person making the kind of claim you're pointing to probably either feels quite strongly about the issue (a economic libertarian discussing the primacy of market-oriented policies, for example) or the person making the claim (a "tribal" leader, perhaps).

An earlier and more limited aspect of this is the Asch effect. As the wikipedia page on argument from authority notes —


  In repeated and modified instances of the Asch conformity experiments, it was found that high-status individuals create a stronger likelihood of a subject agreeing with an obviously false conclusion, despite the subject normally being able to clearly see that the answer was incorrect.