Indiana Gov. Mitch Daniels remains prime player in national GOP

As the National Governors Association meeting in Washington got underway on February 25, it quickly became obvious to reporters and other visitors that the Republican chief executives were not pleased with the way the Obama administration was dealing with them on the largest cause of debt in their states: Medicaid.

“I’d prefer more flexibility on a variety of programs,” Nebraska Gov. Dave Heinemann said at the opening NGA press conference at the J.W. Marriott Hotel. Mississippi’s newly elected Gov. Phil Bryant agreed, saying he hoped the administration would give him a waiver to deal with his state’s ballooning crisis, with 36,000 new recipients to be added to the Medicaid rolls. This will cost an estimated $100 million, Bryant told me, with his state having to match the funds put in by the federal government.

“And we can’t afford it,” he said, “not without a tax increase.”

But the governor who is clearly is most upset by nebulous answers on Medicaid from the White House and is the most outspoken on the issue had yet to arrive on the scene. During a break in the NGA sessions, Indiana’s two-term Gov. Mitch Daniels stepped out into the lobby and was immediately surrounded by reporters—for a number of reasons.

“Medicaid ought to be handled completely by the states,” Daniels said without hesitation, “We have been turned down more than once by [the Department of] Health and Human Services. I’m going to ask them one more time this week. I hope there’s a chance. So far, all they have given us is lip service.”

I recalled to the Hoosier Republican how, earlier in the day, Delaware Gov. Jack Markell had recalled that when the president met with Democratic governors a day earlier, it was Obama himself who brought up the issue of waivers and asked the group “how much flexibility are you looking for?”

“So they say!” Daniels shot back, shaking his head and obviously unimpressed.

As the weekend progressed, more reporters sought Daniels out and he stepped up his criticism of the way the administration is dealing with the crisis that bedevils virtually every state government. On Sunday, the Indiana governor appears on national talk show hosts and steps up the assault on Obama and the administration over what he perceives as its failure on Medicaid.

Although he may not have succeeded in securing the waivers he and his fellow governors so desperately want to deal with the Medicaid crisis, Mitch Daniels—with intelligence and clarity—he did, at least for a few days, kept the issue alive and burning bright in the public arena.

And, as we have for the umpteenth time since he announced he was not running for president last May, my colleagues and I who are covering the NGA speculated on how different the Republican nomination battle would be now if Mitch Daniels were in the race.

“Every competing consideration but one”

Even a cursory glance at Mitch Daniels’ resumé shows that this is someone who, somehow and in some capacity, would be a player in national politics.

A graduate of Princeton and Georgetown University Law School, the young Daniels worked on the staff of then-Indianapolis Mayor Dick Lugar from 1971-76 and, following Lugar’s election to the Senate, on his Washington staff from 1976-82. He ran the National Republican Senatorial Committee when Lugar was chairman of the campaign unit (1983-84) and then served as Ronald Reagan’s White House political director from 1985-87. Following stints as chief executive officer of the Hudson Institute and president of the Eli Lilly Company’s North American pharmaceutical section, Daniels went back to the public sector when he accepted President-elect George W. Bush’ offer to become budget chief.

In ’04, Daniels finally made his move toward elective office when he ousted Democratic Gov. Joe Kernan and thus became the Hoosier State’s first Republican governor in 16 years. Having balanced the state’s budget repeatedly, passed the largest tax cut in state history, and actually cut the number of state employees by 15 percent (7,000 employees), Daniels was re-elected in ’08 by a 3-to-2 margin.

If there is any criticism of Daniels from the right, it is usually about his much-publicized remark last year that we should put aside the social agenda while concentrating on solving the country’s fiscal crisis and thus prevent the party from alienating voters. Daniels, who is pro-life, and pro-marriage has said that cultural issues should be “mute” while the U.S. confronts its economic crisis and that “all I was really saying was I don’t want to lose one person.”

Along with his mastery of budget figures and the nuances of governance, Daniels also has a nationwide circle of friends and contacts that he regularly stays in touch with. My most lasting memory of the governor came during our interview in his Indianapolis office in May of ’08, when—and I got quite a jolt—Daniels suddenly asked by name about my wife and her sister, both of whom he had last seen 15 years before.

Of this rather startling inquiry, a former Indianapolis newsman later told me: “Mitch is Karl Rove in elective office. Whether it’s history or political contacts or names of people, he’ll retain it if he feels it’s important.”

In 2011, signs were strong that Daniels was headed toward a bid for president. During appearances with Chris Wallace on Fox News and at the Christian Science Monitor press breakfast, he appeared to be coming close to an announcement as he freely admitted he was not as charismatic or even as tall as Barack Obama. But, he quickly added, if voters were looking for competence and achievement, he could offer a very clear contrast.

Then, late in the evening of May 21, in an e-mail to friends, the governor made the surprise announcement he was not running for president because of family concerns.

‘In the end, I was able to resolve every competing consideration but one,” Daniels wrote, “The interests and wishes of my family, is the most important consideration of all. If I have disappointed you, I will always be sorry.”

By many accounts including his own, Daniels’ wife Cheri and their four daughters objected to his seeking the White House because of the intense media scrutiny it would bring on their family.

“Indiana has a real primary”

In 2010, Daniels and his fellow Republicans finally got something they had long hoped for: a turnaround of the Democratic edge in the state House of Representatives. Now Republicans controlled both houses of the legislature as well as the governorship, which meant Daniels and Company could pursue a pivotal part of their agenda that had long eluded them: making Indiana a right-to-work state, something the governor proudly signed into law last year. But the GOP’s first priority was enacting sweeping education reform that included charter schools, vouchers, and pay-for-performance.

“And now, we’re looking at a [state treasury] that takes in more money than is being spent,” Daniels told me during the NGA meeting, making sure I noted that Indiana’s “Rainy Day Fund” has funds amounting to 13 percent of next year’s proposed spending.”

Indiana is so far in the black financially, explained its governor, that taxpayers can expect a significant refund this year. In fact, state law requires that once the state surplus hits 10 percent of the cost of the entire state government, taxpayers automatically get a refund.

As much as Daniels warms up to discussing public policy, the questions about politics are inevitable. Would he consider trying to emerge as the Republican nominee for president if the national convention is deadlocked between the present contenders? No, he quickly replies, the chances of those things happening are nil.

Asked if he is bothered by the unusually long and inconclusive process his party is going through to select a nominee, Daniels shakes his head vigorously and says: “No. We’ve been refined and invigorated by a very different process. I never understood why anyone would care about this.”

The major problem with his party, Daniels feels, is not with its candidates for president or the nomination process but that “our side may not be offering a vision bold enough for the American people.”

When I asked if he would consider becoming the running mate for the eventual Republican nominee, he says his choice for the second spot on the GOP ticket is “someone other than me.”

As to whether he will endorse anyone for president, Daniels also says no because, “for the first time in decades, Indiana is having a real primary. We didn’t ‘front-load’ but kept it at the usual time, in May. Now we’re going to offer a lot to our presidential candidates. And I want to be a good host.”

This is the fourth in a series of one-on-one interviews with vice presidential hopefuls. Next week, John Gizzi interviews Pennsylvania Sen. Pat Toomey.