Indianapolis
Economix: Mitch Daniels's Fiscal Blemishes
Of all the Republicans talking about the deficit these days, Mitch Daniels, the governor of Indiana, has arguably the most credibility.
Congressional Republicans have spent much of the last decade voting for tax cuts and spending increases, all the while giving speeches decrying the deficit. Mr. Daniels, who took office in 2005, has reduced the number of state workers by 18 percent and held spending growth below inflation. He has raised the sales tax to help make up for a property tax cut. Largely as a result, Indiana finds itself in better fiscal shape than many other states.
Which is why Mr. Daniels is often mentioned as a potential presidential candidate, despite — as just about every profile notes — not looking much like a president (5 foot 7, with a comb-over) and seeming genuinely torn about the rigors of a national campaign.
I recently sat down with him in his office to talk about what small government might actually look like. To be clear, it would be very different from the Tea Party dream, in which taxes could be cut; Medicare, Social Security and the military could be left untouched; and the deficit would somehow vanish. Mr. Daniels is willing to acknowledge as much.
He says he avoids using the phrase “waste, fraud and abuse” because “it’s too glib — there’s no wand you can wave.” He says military spending should be cut. He called the Republicans’ recent attacks on Democratic efforts to slow Medicare’s cost growth “not a proud moment for our party.” He had kind words for the Tea Party but pointed out that it did not have a solution.
“Nobody that I know got up in front of those rallies and said ‘You’re right, you’re right, now here’s what we have to do,’ ” he told me. “ ‘There’s going to have to be a different kind of Medicare in the future, and there’s going to have to be a different kind of Social Security.’ We really are going to have to re-examine a whole host of these things.”
As nice as it as it may be to keep taxes low and government benefits generous, it’s also folly. At some point, we will have to choose.
At some point, a politician — presumably a Democrat, maybe President Obama — will make the case that Medicare, Social Security, a strong military, good schools and a large scientific-research budget are worth the cost of higher taxes. For precisely these reasons, countries, including this one, have tended to raise taxes as they have grown richer.
On the other side of the debate, one hopes, will be a Republican willing to make an honest case for low taxes. These days, Mr. Daniels is the closest thing to being that Republican.
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In person, he lives up to his reputation of lacking a politician’s usual airs. Ten minutes before the scheduled start of our interview, he wandered out of his office, on the second floor of the grand State Capitol, and poured himself coffee into a paper cup. He was wearing a bright blue shirt with a logo reading “Indiana accelerates your business” that seemed like something from a company retreat.
Over the next 90 minutes, he laid out what amounted to a three-part vision of American government.
The first part revolves around simply making government work better. “Government is, essentially, the last monopoly,” he said. “Monopolies tend to abuse their position. They overcharge and underserve their customers.” No matter how bad the service at the Bureau of Motor Vehicles, you can’t get your license anywhere else.
So Mr. Daniels has tried to “implant accountability,” as he puts it. The state measures workers’ performance and has given bigger raises to top performers. Mr. Daniels also holds an annual ceremony to celebrate workers who have saved Indiana money.
The focus on performance has allowed the state to reduce its work force, largely through attrition, and still function well. “So far, he’s managed to do it without a noticeable loss of service,” John Ketzenberger, president of the Indiana Fiscal Policy Institute, told me later. Lawrence DeBoer, a state budget expert at Purdue, added, “You’ve got to give them some credit for that.”
Mr. Daniels’s favorite example is that the average wait time at the Bureau of Motor Vehicles has fallen to eight minutes, from 40 minutes, since 2005.
Nothing about this good-government push is inherently Republican, either. Mr. Obama, who talked during his campaign about creating an “iPod government,” would be wise to see what the federal government might learn from Indiana.
E-mail: leonhardt@nytimes.com
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