The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

On Mitch Daniels


If you haven’t read Andrew Ferguson’s brilliant profile of Mitch Daniels, the highly effective governor of Indiana, you should, and not just for its not inconsiderable entertainment value. Daniels is one of a small handful of public officials who’ve pursued a consistent and coherent conservative program while in office, and he’s found a way to make it broadly appealing. When attacked for demanding that school officials restrain their spending, Daniels worked to raise awareness of the real choices facing school districts.

In fact, the governor’s office has publicized a “Citizens’ Checklist” that people can take to their local school boards to see if school officials have made every possible economy. Citizens in Vincennes need to take that list and get answers, he said. The list is filled with questions. Have the administrators “eliminated memberships in professional associations and reduced travel expenses”? Have they “sold, leased, or closed underutilized buildings”? Have they “outsourced transportation and custodial services”?

A debate that had once pitted those who were “for the children” against those who were “against the children” suddenly became a debate about how much should be spent on classroom instruction versus administrative overhead. 

“I want citizens to understand,” he said. “When people start demanding we spend more money, they’re saying, ‘We want to raise your taxes.’ And the citizens should say, ‘Okay, tell me. Which one of my taxes do you want to raise?’ ”

That is, we can have an honest disagreement about whether new public spending is worthwhile. But let’s at least acknowledge that we’ll have to pay for it. Intriguingly, the governors has focused his team on the goal of increasing the “net disposable income of individual Hoosiers,” which has led to innovative approaches to a wide array of public policy challenges.

At the BMV, Daniels said, time was money: Cut wait times and Hoosiers have more time to run their businesses or work at their jobs. In some cases, the goal requires enlarging government rather than cutting it. The administration hired 800 more child caseworkers and vastly expanded efforts to help single mothers collect child support, a particular Daniels obsession. (The state now withholds hunting and fishing licenses from deadbeat dads, and casinos, licensed by the state, are required to check the child collection rolls before dispensing winnings.) He began a program to underwrite discounted prescription drugs. To supplement Medicaid, and in time perhaps replace it, he introduced state-sponsored medical insurance built around health savings accounts. Participants were required to pay in to the accounts, which were heavily subsidized by the state, and they had the responsibility of making their own health care decisions. To pay for the program, and to enable the property tax cut, Daniels agreed to increase the state sales tax by one percentage point. 

Of course, this focus on difficult trade-offs means that some constituencies will be disappointed. In an interview with Daniels, Jennifer Rubin asked him a question about national security. She found his answer wanting

I asked him the sole question on foreign policy — in what fundamental ways Obama had erred? He did not address any of the basic concerns conservatives have been discussing (e.g., engagement with despots, indifference on human rights, animus toward Israel). Instead, he gave a platitude, “Peace through strength has totally been vindicated.” And then he immediately asserted that we have to “ask questions about the extent of our commitments.” He said, “If we go broke, no one will follow a pauper.” At least temporarily, he said, we can’t maintain all our commitments. But if our foes don’t take a break, what do we do? Should we pull up stakes in Iraq and Afghanistan and hack away at the defense budget? It’s not clear whether he has thought these issues through, or whether he views foreign policy as anything more than a cost-control issue.

My gut tells me that Daniels has thought about this issue very deeply, and that he has drawn the right conclusion. At the margin, we need to give serious thought to paring back our commitments, to the extent doing so is consonant with our long-term interests. I have a lot of respect for Jennifer Rubin, and I understand that she’s troubled by the idea of nickel-and-diming national security.

But like a growing number of conservatives, including Sen. Tom Coburn, I’m concerned about profligacy in the defense budget. Josh Barro has just written an excellent column on this subject for RealClearMarkets.  


It is difficult to track the efficiency of Pentagon spending overall because of the organization’s poor financial controls. According to a Department of Defense Inspector General Report, the Pentagon’s own financial management systems “prevent DOD from collecting and reporting financial information … that is accurate, reliable, and timely.”

For this reason, Coburn has called for a comprehensive Pentagon audit to seek out waste. Ordinarily, calls to eliminate “waste, fraud and abuse” should be viewed with skepticism — in many large government programs, especially entitlements, the key drivers of runaway spending are conscious policy choices, not waste.

But the ways in which the Pentagon differs from most federal programs — it is a vast organization with millions of employees and operations worldwide, not a clearinghouse for transfer payments — mean an audit is likely to be fruitful.

As Josh notes at the start of his column, entitlement spending is by far the biggest budgetary problem we face. But growth in security spending has to be contained if we’re going to get the federal budget under control. And I’m glad that Mitch Daniels appreciates that fact.  


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