The Reforming Governor

Gov. Mitch Daniels has guided Indiana through tough economic times while cutting government spending.
by Sheryll Poe, Free Enterprise: Indiana Republican Gov. Mitch Daniels isn’t running for the nation’s highest office, but that doesn’t mean he’s going away quietly.

Since announcing in May that he would not seek the Republican nomination for president, the Harley-riding, Princeton-educated governor has stayed in the spotlight, offering his policy prescriptions for getting the country back on track in his new book, Keeping the Republic: Saving America by Trusting Americans In it, the onetime Reagan White House political director and Bush White House budget chief lays out in stark, mathematical terms the threat that the American Republic faces if government spending is not brought under control.

“The point of the book is that we are about to test not only whether we can manage our fiscal affairs and restore our economy, but also whether we’re still the kind of people who are competent to govern ourselves,” Daniels says during an interview with Free Enterprise magazine just weeks after his September book release. “It’s not a matter of philosophy; it’s a matter of arithmetic. I would hope there are not too many people left now after watching what happened in Greece, Italy, and Spain who don’t understand that there are mathematical points of no return.” America has reached a dangerous point, says Daniels. “Congress hasn’t moved fast enough. It hasn’t done anything on entitlements. It hasn’t really done anything meaningful on spending. I hope we have enough time.”

Changing Indiana
For someone often portrayed as a serious policy wonk, Daniels exhibits charm and a fine sense of humor. When he had surgery to repair torn cartilage in his right knee, Daniels took a sharpie and wrote “this one dummy” on the leg being operated on. In retaliation, his surgeon, a longtime friend, gave him a pink pedicure.

He’s also proud of his frugality, both when it comes to his cuts to state spending and in his own life. When running for governor in 2004, he traveled around the state in an RV and stayed in people’s homes. During our visit, he proudly showed off a light blue tie given to him by his friend Steve Forbes, gleefully pointing out that the tie was a leftover from Forbes’ annual Global CEO Conference in 2008.

No one can argue with Daniels’ success in turning around the Hoosier State. Since taking office in 2004, Daniels has turned a $200 million deficit into a $1.3 billion surplus by improving government services and creating private sector jobs. He’s lowered property taxes by 30%, privatized a major state highway, and ended collective bargaining rights for public employees without the contentious fights that other states have experienced.

He did it the old-fashioned way—by spending less than what the state takes in and by cutting government spending. Today, Indiana has the country’s fewest state employees per capita, employing the same number it did in 1975. “I say to people - you’d be amazed by how much government you never miss.”

Restoring Americans’ Autonomy
What bothers Daniels most about the current leadership in Washington is that it does not trust Americans to manage their own lives. “The problems I have with those in leadership now and the mentality that they represent is they’re really telling the American people: You can’t cut it. You can’t manage your own life. It’s just too complex, and left to your own devices, way too many people will simply make mistakes,” says Daniels. “So as I say in the book, we really have to decide if we are creatures of dignity or objects of therapy. I argue for policies that would affirm and restore the average citizen’s autonomy.”

Daniels points to the state health care reform he put in place in 2006. The Healthy Indiana Plan (HIP) is a health savings account for state employees and the uninsured. It’s paid for by a new cigarette tax and a waiver approved by the federal government that allows the state to reallocate Medicaid dollars toward the plan. “Citizens make their own decisions and manage the money. They are protected in true insurance fashion,” Daniels explains, noting that 99% of Indiana’s state employees have signed up for HIP. “We now have a body of experience that shows just because people have a moderate or low income doesn’t mean they can’t make wise decisions for themselves, and in fact, we have substantially lower health costs—by double digits—than would ordinarily be expected. Why? Because people are acting like real consumers.”

Daniels doesn’t hold back his criticism of the Obama administration, which, he says, is pursuing an agenda in which “jobs and growth always lose—doesn’t matter what the issue is. And an administration that can’t immediately stop piling new regulations, costs, and doubts in front of job creators is not serious about anti-poverty. It’s not serious about bringing down unemployment in this country. There are other things that are more important to it. The administration probably doesn’t see it that way, but based on the facts, there’s no other way to see it.”

To put America back on track, the administration must reform the tax code and entitlements, take advantage of plentiful energy supplies in the United States, and declare an indefinite moratorium on new regulations, according to Daniels.

Despite his frustration with the current administration, Daniels says that he’s optimistic about the great American experiment: democracy. “Trust Americans to make more decisions in their own lives, and trust Americans with the facts regarding our national debt and the incredibly dangerous corner we’ve painted ourselves into. The solutions are going to require big change, but practical change that I believe we can assemble a majority of support for.”

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