Mitch Daniels' Lost Agenda: Compassionate Conservatism
Policy + Politics

Mitch Daniels' Lost Agenda: Compassionate Conservatism

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So what would have been Gov. Mitch Daniels’s platform for slashing the deficit if he hadn’t decided against seeking the Republican presidential nomination? The mild mannered former Bush era White House budget director appeared on Wednesday at a fiscal summit in Washington just a few days after announcing that he wouldn’t run for president.  He pinned his decision to family reasons.

Because Daniels had so much success as governor in turning Indiana’s finances around and balancing the budget, it seemed like an obvious question to ask what a Daniels campaign fiscal agenda might have looked like.

“The guts of it would be to say that as a matter of arithmetic – not as a political philosophy, not as a commitment to any particular side—that if we’re going to preserve the American dream, and we can, we've got to do a few fairly straightforward things,” Daniels said. “And they need not hurt anyone; in fact they will save a lot of people, starting with preserving Medicare and Social Security for those [older Americans] in or anywhere near them today.”

“I say Medicare 2.0 and Social Security 2.0 so that those younger people will have something to rely on, too,” he added. “We ought to restructure them today to protect the most vulnerable, and to shift in a big way the available dollars to those who really need them or will need them. The rest of the federal government needs to be examined and reduced to an affordable level, and that includes looking at all of our defense commitments.”

"If you only weed the [tax code]
garden once in every 25 years it will be
a Washington you have a lot of
people running around planting weeds.”

Daniels arrived at the fiscal summit with a large bandage on his forehead that covered a huge gash he suffered when he was hit by a swinging door at a health club back in Indiana. He offered other observations during his appearance at the Peter G. Peterson Foundation second-annual Fiscal Summit:

  • Cutting spending is difficult and will prompt much grumbling and demagoguery by special interest groups, but “if you deliver results, you will not only survive but thrive.”
  • Imposing tough budget enforcement laws to force Congress and the White house  to adhere to long term spending reductions – much like the old Gramm-Rudman-Hollings law—“are very important but not always effective” because of loopholes and exceptions. Daniels said that some of the ideas now being kicked around to cap spending and automatically trigger across the board cuts when Congress veers from the path of deficit reduction are “blunt instruments” of “limited utility.’
  • Medicare, Medicaid and other costly entitlement programs that are the main drivers of the $1.5 trillion annual budget deficit must be reformed and scaled back, but without shredding the social safety net.
  • The federal tax code is a mess and needs to be shorn of many of its wasteful and unjustifiable tax breaks or tax expenditures. “If you only weed the [tax code] garden once in every 25 years it will be a mess,” but in Washington “you have a lot of people running around planting weeds.”

Daniels, in his second term as governor, had been courted by heavyweights in the GOP hoping to convince him to make the plunge into the presidential campaign. News reports circulated that former First Lady Laura Bush had made a personal appeal to Daniels’ wife, who reportedly was ambivalent about such a run. It also is no secret that many GOP power-brokers saw Daniels as the party’s most formidable challenge to President Barack Obama.

Last weekend, Daniels reluctantly announced that he wouldn’t be a candidate for the GOP presidential nomination because of opposition from his wife, Cheri, and their four daughters. “In the end, I was able to resolve every competing consideration but one -- the interests and wishes of my family," Daniels said in a statement emailed to supporters early Sunday morning. “If I have disappointed you, I will always be sorry.”

Asked by The Fiscal Times yesterday whether he might reconsider if his family has a change of heart, Daniels replied, “Well, they’re not going to, and no, I haven’t had any second thoughts.” Without saying which of the GOP presidential candidates he might back, Daniels said “I am going to look for ways to be constructive, in some small way.” He noted that he has a book coming out this fall (probably originally timed for release around the launching of his campaign) that deals with a panoply of economic and budget issues. “Maybe two or three people will actually buy the thing,” he quipped.

Daniels’ victory in Indiana’s 2004 gubernatorial race was his first bid for elected office. While he headed Bush’s Office of Management and Budget, the president nicknamed him “the Blade” for his budget-cutting prowess. He also served as a senior adviser to President Ronald Reagan and as a chief of staff to Senator Richard Lugar, an Indiana Republican.

On his first day as governor in 2005, Daniels issued an executive order abolishing collective bargaining for state workers, and he focused on pushing for efficiencies in government operations. In 2008, Daniels won re-election with 58 percent of the vote, even as Obama carried Indiana on his way to winning the presidency.  Daniels’ record as governor on fiscal issues attracted the attention of other leading Republican officials. Far less was said about his two-and-a-half year stint as budget chief when the Bush administration began racking up record deficits.

President Bush presided over a $2.5 trillion increase in the public debt through 2008. according to a Washington Post analysis. Setting aside 2009 (for which Presidents Bush and Obama share responsibility for an additional $2.6 trillion in public debt), President Obama’s budget would add $4.9 trillion in public debt from the beginning of 2010 through 2016. 

If he had decided to run for president, Daniels’ record as OMB chief undoubtedly would have become an issue. When asked yesterday by a reporter to describe the political realities in early part of Bush’s term  that prevented him from achieving the same record of budget-balancing that he achieved as governor of Indiana, Daniels blamed part of it on a “collapse of revenue” which sharply cut into the surplus that Bush inherited from President Bill Clinton.

“People should know this,” he said. “It wouldn’t have mattered if Bill Clinton or Ron Paul were president in ‘01 and ‘02. That temporary surplus was going away because revenues that were surging because of the [tech] bubble disappeared." The government then began racking up huge deficits following the Sept. 11, 2001 terrorist attacks, including massive spending on homeland security, and the U.S. invasions of Afghanistan and Iraq.
Daniels said that government spending has doubled in the intervening ten years, and that the national debt -- which hit 3.5 percent of Gross Domestic Product while he worked for the Bush administration -- is almost three times as great now under President Obama.

“We are in a completely different zone,” he said. “There has been more debt accumulated in the last two years  with this president than in all eight years of the Bush presidency put together, including the  two and a half years I was there and the five and a half years when I wasn’t.”

“I don’t know what good it does, frankly, to revisit those years,” he concluded. “We would love to be living under those [budget deficit] conditions today.”

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