The Redemption Of Mitch Daniels

by Jonathan Chait | February 26, 2010

The latest potential Republican presidential contender is Indiana Governor Mitch Daniels. I wrote about Daniels back when he ran the Office of Management and Budget under George W. Bush, where his task was to use pseudo-populist demagoguery to deflect from the administration's disastrous fiscal record:

The man Bush has deputized to explain this state of affairs to the American public is Mitchell G. Daniels, director of the Office of Management and Budget. One of Daniels's favorite techniques is to preface his views on macroeconomic policy by pointing out that he is a country bumpkin. "To me, coming off a turnip truck from the Midwest, the urgent need to enact new spending when the ink is barely dry is curious," he said earlier this year. If you are wondering how a Midwestern yokel managed to become the White House budget director, Daniels pulled off the feat by spending most of his adult life brilliantly imitating a member of the East Coast elite. After obtaining degrees from Princeton and Georgetown Universities, he worked as a Capitol Hill staffer, a White House appointee under Reagan, executive director of the National Republican Senatorial Committee, and president and CEO of the Hudson Institute, a conservative think tank. Then he amassed $30 million as a pharmaceutical executive. Nonetheless, Daniels has not forgotten the simple values of the heartland. "Out here in Indiana," he admonished Sam Donaldson last week, "people are concerned about jobs and income prospects, not bookkeeping entries."
Daniels says we should forget about saving the Medicare surplus--it's one of those "bookkeeping entries" that plainspoken Midwesterners dismiss--in order to help us out of the economic downturn. And, indeed, Keynesian economic theory does suggest that, when the economy slows, the government should put money into the hands of consumers through tax cuts and spending. But Daniels applies this theory only when it suits him: Although the same economic theory argues for spending increases, Daniels wants spending cuts.

The interesting thing is that Daniels has emerged as a completely different sort of figure as Indiana governor: well-versed in the details of governance and not terribly partisan, or basically the polar opposite of the Bush administration. When a major Republican figure is touted as having moderate credentials, it's usually based on some utterly frivolous basis, like wearing a mullet. In Daniels' case, the there's some real substance. Jill Lawrence summarizes some of Daniels' moderate credentials:

Daniels has told fellow Indiana Republicans that he will not sign an overtly partisan redistricting plan from either party. He has expanded health coverage and all-day kindergarten and raised a tax or two since taking office in 2005. His administration last year fired IBM and took back control of the state's welfare program, an acknowledgment that privatization -- a conservative shibboleth -- was failing.
While other Republicans, such as Pawlenty, are under attack for calling the federal stimulus package useless and wasteful, even as they plead for the money and brag about creating jobs with it, Daniels is more nuanced. Some stimulus was fine with him, he said, but "the way they did it turned out to be mediocre."
While other Republicans, such as Sen. John McCain of Arizona, have made a career of attacking earmarks -- the sometimes undeserving one-point projects lawmakers tuck into big bills without a review process -- Daniels dismisses their budgetary importance. "You can erase every earmark tomorrow and we all know that doesn't fix anything. It ought to be done. It's a little start. It's the right thing to do. But that's a BB. And we have to shoot high-caliber solutions at these problems," Daniels said.
While other Republicans opposed a bipartisan deficit-reduction commission because they feared it would recommend tax increases as well as spending cuts, Daniels says the commission is "worth a try" and doesn't rule out new taxes. "The answer need not and should not include tax increases. That's an intellectually responsible argument," he said. "But the only thing that I think can be ruled out is continuing in our present barrel right over Niagara Falls."

So maybe he wasn't such a bad kid after all. He just needed to get away from the influence of the Bush administration.

I can't imagine a figure like this making it through the GOP primary. Of course, as I often point out, abandoning the party's taboo against tax hikes is the only way the GOP can shrink government spending. You can't shrink government without reducing entitlements, you can't reduce entitlements without some Democratic support, and you can't get Democratic support unless you're combining higher revenues with your spending cuts. A relatively less partisan figure who's not dogmatic about tax cuts is the party's only plausible vehicle to smaller government.

Of course, I don't think any prominent Republicans realize this. They'll just keep allying around leaders who promise to cut taxes and spending, succeeding at the former but not the latter.

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