Daniels’s stock rose earlier this year after he spoke to the American Conservative Union’s annual Conservative Political Action Conference, where he delivered a sobering speech outlining the fiscal threat he sees looming.
“We cannot deter it,” he said. “There is no countervailing danger we can pose. We cannot negotiate with it, any more than with an iceberg or a great white.”
Daniels also said that night that the changes he advocates require big majorities. “We will need people who never tune in to Rush [Limbaugh] or Glenn [Beck] or Laura [Ingraham] or Sean [Hannity],” he said at CPAC, “who surf past C-SPAN to get to [ESPN’s] ‘SportsCenter.’ ”
In the debate between Ryan and Obama, Daniels knows where he stands. He called Ryan’s proposal for ending Medicare’s defined-benefit structure “exactly the right direction to head,” though he says he is open to other serious alternatives. Asked about Ryan’s proposal to convert Medicaid into a block grant with full flexibility for states, he replied, “Bring it on.” He says that means testing should be part of any solution to restructuring Social Security and Medicare.
Daniels said he was “deeply disappointed” by Obama’s recent budget speech. “At a time when we should seek to unify Americans around the big changes necessary to deal with this life-and-death issue, he was divisive and partisan,” he said. “In terms of content, it was worse than empty.”
The Bush years
Daniels’s focus will prompt questions about his service as budget director during the first 2 1 / 2 years of Bush’s presidency, as the country was beginning to move from surpluses to sizable deficits and a big increase in the national debt.
Daniels argues that the problem has ballooned dramatically under Obama, that debt and deficits today represent a far bigger share of the overall economy than in the Bush years. “We’d give anything to be within a country mile of that now,” he said.
But he also argues that the best judge of his record is as a governor who set his own priorities. “Nobody’s perfect,” he said, “but if you go look at our record, I think it’s by most measures a strong one.”
That record includes shrinking state government employment to its smallest level since the late 1970s (and to the lowest per capita of any state in the country), keeping his budget in the black through the worst of the recent recession without raising taxes, and a package of education proposals that he hopes will be enacted by the end of the month. Daniels says he’s also proud of the work he has done to improve the business climate in the state.
Democrats see his record in less glowing terms. State Rep. B. Patrick Bauer, the Democratic leader of the House, called Daniels’s approach to budgets “slash and burn.” Dan Parker, the chairman of the Indiana Democratic Party, said Daniels’s record earlier in his term on taxes — a sales tax increase that was part of a broader plan that lowered property taxes and a cigarette tax increase to fund health care for low-income families — could draw criticism from conservatives.
One questionable decision was his attempt to privatize parts of the state welfare system. Indiana turned over the processing of eligibility claims to private contractors, including IBM. After widespread complaints, Daniels and other state officials decided to terminate the contract and have instituted a hybrid system.
The result is a nasty lawsuit. IBM lawyers want to depose Daniels; he is resisting. Daniels’s critics say the details of the privatization plan, as they become better known, will raise questions about the governor’s judgment and management oversight.
In his first days in office, Daniels ended collective bargaining for state employees. Unlike what has happened in Wisconsin and Ohio this year, where Republican governors and legislators have pushed to do the same, Daniels’s decision, done by executive order, created almost no controversy.
Daniels has also avoided confrontational tactics when it suits him. This spring, when Democratic legislators, angry over a legislative proposal to make Indiana a right-to-work state, staged a walkout, Daniels successfully persuaded Republican legislators to shelve the bill. He feared that a battle with unions would jeopardize his education agenda.
Daniels still hopes other candidates will take up the banner of fiscal reform. Friends say he is now dubious that they will. That leaves him where he has been for more than a year — on the fence — but with the clock about to expire.
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