Is America ready for a president who will cut spending? Our November cover story.
The Weaver Popcorn Company’s website advertises this fact as a “kernel of truth”: their business was founded — and is still based in! — Indiana. But CEO Mike Weaver didn’t come to talk about microwave popcorn. At the moment, he is more interested in touting another Hoosier product for possible national consumption: Indiana governor Mitch Daniels.
Weaver says Daniels is usually “the smartest guy in the room” and a true “servant leader” who gets things done for Indiana. “He’s also very modest,” Weaver adds. “Almost to a fault.” Indeed, Daniels professed surprise that he’s about to be the subject of another magazine article. “Did you run out of other things to write about?” he asks. But Daniels thinks the country could use a little humility from its leaders, a sense of realism about Washington’s financial and metaphysical limits.
Call it a humble domestic policy. “We are approaching a moment of Republican responsibility,” Daniels avers. The central question is whether the GOP can govern as well as it can campaign against Democratic profligacy. At dinner with a group of conservative intellectuals and journalists in New York — “I’m surprised I don’t have a rash,” he says of his two days in the city — he argues that the focus must be on making the federal government fiscally sound again.
“The Democrats are better positioned to do this in a Nixon goes to China sense,” Daniels says. “But that’s purely theoretical. It won’t happen. There’s no interest.” Bill Clinton isn’t president anymore and the era of big government was never really over. So the challenge of balancing the budget, getting control of the national debt, and reforming the country’s sagging entitlements falls to the Republicans.
The Republicans have seldom been equal to the task. Party leaders have made a serious effort to reduce federal spending exactly three times since World War II: the “Do Nothing” Congress of 1947-48, the Congress that came in with Ronald Reagan in 1981-82, and the Gingrich Congress of 1995-96. In the last two cases, the results were short-lived. In the first, the Republicans were promptly relieved of their majority by the voters in the next election.
GOP bigwigs have gotten the message. When Rep. Paul Ryan (R-WI) introduced a bold plan to tackle the entitlements crisis, few Republicans came to his aid. Most of his colleagues preferred a campaign document that largely confined its critique of federal spending to earmarks while engaging in a little demagoguery about Democratic Medicare cuts. Opposing Barack Obama is one thing. Cleaning up after him — and fellow spendthrift George W. Bush — is another.
THAT’S WHERE MITCH DANIELS comes in. Members of the Republican spending-cutters hall of fame include such flinty Ohioans as Robert Taft and John Kasich. Perhaps it’s time to look next door to Indiana, where Daniels has one advantage over the Buckeye budget hawks: executive experience that might come in handy on the opposite end of Pennsylvania Avenue. But are the American people ready for a leader who says less is more?
Daniels started burnishing his credentials in this area before the governorship. The Princeton graduate managed Richard Lugar’s 1976 Senate campaign, followed Lugar to Washington and spent eight years working in the Senate, and then became a political aide in the Reagan White House. Daniels has thus seen the inner workings of government as both an elected official and a staff member. “It’s sometimes kind of intimidating to work as a staffer for a guy who has done your job, only could do it better,” says former Daniels communications director Brad Rateike. “When you say something couldn’t get done, he’s like, ‘Really?’ ”
Daniels worked his first magic as a budget-cutter when he returned to Indiana to become chief operating officer of the Hudson Institute. The free market think tank had fallen on hard times and Daniels was widely celebrated in conservative circles for turning things around. Introducing himself to the group at the New York dinner, current Hudson Institute president Herb London shook his head with a smile and said, “I know Governor Daniels can cut costs.”
Eli Lilly & Co. plucked Daniels from the nonprofit sector and put him into the private sector in 1990, hiring him to head its corporate affairs division. He worked his way up the ranks, eventually running the company’s North American operations. But government beckoned again, prompting Daniels to leave Lilly to become President Bush’s budget director. In an administration known for its fiscal tomfoolery, Daniels was called “the Blade.” Even the one criticism of his tenure at the Office of Management and Budget — that he lowballed the costs of the Iraq war — is misleading.
Daniels wasn’t asked to project the cost of an eight-year occupation. His assignment was to calculate the price tag of speedy invasion with six months of war. The resultant number-crunching justified the initial Bush request of $74 billion in funding. But it wasn’t Daniels’s fault that there wasn’t flower-throwing and a phased withdrawal afterward. By 2004, Daniels was ready to tack his budget scalpel back home and run for governor of Indiana.
Once elected, Governor Daniels started cutting right away. On his first day in office, he rescinded his Democratic predecessor’s executive order allowing collective bargaining by government unions. As conservative journalist Conn Carroll later wrote, “The decision has not only cost the left’s perpetual dependence machine millions in taxpayer-funded union dues, but also enabled the state to cut costs by instituting a ‘pay-for-performance’ personnel system.” Daniels trimmed the state payrolls by 14 percent and Indiana now has fewer state employees than it did in 1982.
Daniels eliminated a $200 million deficit and transformed it into a $1.3 billion surplus, boosting the state’s bond rating and cash reserves after eight years of unbalanced budgets. He was able to cut property taxes by an average of 30 percent despite a Democratic-controlled lower house of the legislature, delivering the largest tax cut in Indiana history.
Under Daniels, all state agencies were made to cut their budgets by 10 percent and Indiana sold two-thirds of its state-owned airplanes. Most state employees didn’t get pay raises in 2009 or 2010 and the governor’s pay was cut. But more than 50,000 low-income Hoosiers received health coverage through a relatively free-market reform — the Healthy Indiana Plan — that combined health savings accounts with catastrophic insurance (though the program’s health savings accounts may now run afoul of ObamaCare’s new qualified coverage standards).
These statistics and professional accomplishments will count for little on the national stage unless they are connected to a broader vision of governance. “Talking about what you’ve done in Indiana is kind of like showing home movies,” Weaver admits. “People pretend to listen but they don’t really care.” It is, however, a track record that suggests Daniels might be qualified to meet the challenges that lie ahead.
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