While Barack Obama carried Indiana last November - the first time since LBJ that a Democrat accomplished that feat - Republican incumbent Gov. Mitch Daniels rolled up the largest vote total of any statewide candidate in Hoosier history. The governor is also steeped in Washington politics, having served as the executive director of the National Republican Senatorial Committee, chief of the political and intergovernmental affairs shops in Ronald Reagan's White House, and George W. Bush's first Office of Management and Budget director. Daniels spoke recently with National Journal's James A. Barnes about how his party was faring during Obama's first 100 days in office. Edited excerpts follow.
National Journal: Over the last 100 days, how do you think the Republicans have adjusted to being the opposition party?
DANIELS: Erratically. But, you know, they're gaining on it.
NJ: Does the party have an image problem?
DANIELS: You don't need me to tell you that. That's why you lose elections.
NJ: What do you think it is?
DANIELS: I do think that Iraq discolored everything by taking so long to turn into victory. And some wandering from our roots in term of fiscal restraint. And throw in a dash of misbehavior.
NJ: Misbehavior meaning?
DANIELS: Well, I'm talking about - well, misbehavior. I don't want to start naming names, but various scandals. And then of course the economic collapse coming right at the end. So, since there's some rhythm in American politics, you put all that together after eight years in office and much of that in legislative leadership, too, and it was a pretty strong brew.
NJ: What do you think is the lesson that Republicans have learned from these bad election results?
DANIELS: I think it has restored us to our roots in fiscal prudence. And that has not gone out of style, would be my observation, despite the unbelievable orgy of spending that has started in Washington. I don't find very many people who think that's good policy, and many more are very worried about it....
When I have heard from people at the national level, I've said, "Listen, accept that we're going to have to spend some time in the penalty box." There are not going go be instant recoveries. The American people are going to want to know: Did you learn any lessons, and do you have some new plans for us? And that doesn't happen instantly, but it can happen within the two-year window or a four-year window.
NJ: What do you think is the biggest lesson that the Republicans haven't quite learned yet from the last election?
DANIELS: Always have a better idea. Let me tell you how this looks from out here - and we're anomalous. In Indiana, Republicans are the party of change and reform; ask anybody - our opponents, the press, everybody. In the rhythm of life here, four years ago we replaced a 16-year regime that had gone stale.
And so we are the party that restored fiscal integrity. We are the party that addressed health care for the uninsured. We are the party that rebuilt an attractive business environment. We are the party that cleaned up the ethics issues in government - that and much more. We attacked our infrastructure problem in a novel and taxpayer-friendly way.
NJ: That you took a little heat over...
DANIELS: Yes, yes, but you know, the results are in - and incidentally, we just won with the largest vote total in the history of elections in our state for any office any year.
NJ: A tough year, too...
DANIELS: In a tough year, Obama won the state - you know that. I guess what I'm saying is that when Indiana Republicans meet, I always tell them we cannot control what the party looks like in other places or nationally, but here in Indiana if we don't remain the party always defining the agenda, bringing the new ideas and standing for constructive change, then people will excuse us from duty. And they should. ...
People want to know first of all that you hear them and understand what's going on in their lives. I work at this incessantly - I was riding all over Salden, Indiana, on my motorcycle Saturday - and that you have some thoughts about how you make life better, more secure for them. Now, those thoughts can be animated by what we consider Republican principles, and that's fine. In other words, I don't think fiscal prudence went out of style; in fact, people are rediscovering it themselves, right? Save more, spend less - and I think they expect government to emulate that.
When we addressed health care for the uninsured, or insurance for those without, it's a very free-market solution - it's basically HSA's for poor people - and it's extraordinarily popular. I had a lady hugging me and crying down in a coffee shop in Connorsville Saturday morning because she got coverage - I've had this experience a thousand times - she got coverage and she couldn't possibly have had it any other way. I just think that the image problems we have are very real, but also addressable, by a Republican Party that goes out of its way to show that it cares about average people and the least advantaged.
Let me just go off on another one my little sermons I always give. Here's a political fact of life: You can be a blue-blood, silver spoon, coastal elitist, and if you have the Democratic label, you start with the presumption that you are connected to average folks. And the Republicans start with the negative presumption. So don't whine about it being unfair, just recognize it and go work on it.
NJ: Democrats and their allies have labeled the Republicans as "the party of no." Do you think that can stick?
DANIELS: Do you know what's interesting about that? That's exactly the word I've been using for the last four years in Indiana. You can go Google it. In Indiana, the Democratic Party - and by the way, it fits - I've said they are the party of no, they are the party of yesterday. That's exactly our comment about our opponents here. So it shows that being negative or being without new ideas is not the province of any side.
NJ: Since it's worked for you with some success, are you a little worried that Democrats are going to be able to use it with some success in Washington?
DANIELS: If we allow it. Here, our opponents never had a better idea. It was always just "no." And that was a blessing, frankly, to us. But there's no reason at all that the Republicans can't say, "Sure, let's get people covered with health insurance but here's a much better way." And I think they know the outlines of it. There's no reason they can't say, "No, let's not double the tax on poor people in the vain hope of moving the world's thermometer. Here's a way to conserve energy and protect the environment that doesn't impoverish the nation in the process."
Always, always, you have to start with a better idea. And given the line-up of Congress right now, you won't pass it, but the public needs to see you care and that you've thought about it and you've got a constructive suggestion.
NJ: Do you think the Republicans in Congress can do more to demonstrate they're sincerely interested in bipartisanship?
DANIELS: To me there's not a lot of upside in whining. I hear Republicans whining about, you know, the Democrats not being bipartisan. You know, "We weren't included in this, we weren't at the table in that." Well, get over it, that's the way those folks are.
And, you know, I don't think the public is ever particularly impressed with process arguments. What they should say instead is, "Well, here's the way we would spread health insurance and not ration care and not take away your freedom in the process. If they'd let us in the room, this is what we'd suggest." I'd concentrate on your better answer, recognize that the other side won an election. They are ruthless about what they want to do to seize territory for the government from private life. Go to work on alternative ideas that maybe one day we'll get the chance to try.
NJ: How are you doing these days?
DANIELS: How am I doing? Well, we've got very tough problems, we're dealing with them. Revenues are falling off. Just a year ago we were at full employment in Indiana, and everything was going great; we were breaking records for new jobs. Then of course as a manufacturing capital we got hit very suddenly, and right now not only is unemployment above the average, but we've had a very sharp drop-off in revenues. So we're dealing with it.
NJ: Has the stimulus been much help?
DANIELS: Yes, it's going to be a help. There are now fewer than 10 states that haven't had to raise taxes; we are one. We still have money in reserve, but we're going to have to be extraordinarily careful to stay that way. Our plan is to enhance our competitive position during this tough, tough time. While our neighbors and cousins around the country are raising taxes and slashing services, we're doing our best to avoid either. And so far, so good.
NJ: Do you think it was a mistake for some Republican governors to come out against the stimulus?
DANIELS: Oh, I don't judge. Every circumstance is different.
NJ: You stayed away from it.
DANIELS: I did.
NJ: You didn't let yourself get drawn into that debate.
DANIELS: I didn't see any point in it. I'm just trying to do right by our 2.2 percent of America. The stimulus - I don't fault people who voted against it. (Republican Sen.) Dick Lugar from this state, a very bipartisan - I'd say a nonpartisan guy - and he (voted against it). There was plenty in it to object to. But as a governor, I don't have a vote; my job was to use whatever Washington produced to the best advantage of our state, and that's what we're spending all our time on, not criticizing anybody.
I'll give you one other thing that to me is obvious: I think that the party needs to be a loyal opposition. And that means, where you do find something to agree with, be clear about that. And the best example I can cite in this administration is its education policy, which in general, in the broadest sense, is really quite good. And we shouldn't hesitate to say so, because then if you have to take exception to something else, at least people know that you do look at these things case by case; you're not just reflexively saying no.
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