Mitch Daniel Transcript

Taped June 28, 2015

Table of Contents

I: The Daniels Campaign 00:1508:23
II: Governor of Indiana 08:2330:33
III: To Washington and Back 30:3342:05
IV: Office of Management and Budget 42:051:06:22
V: Change that Believes in You 1:06:221:15:20
VI: Intellectual Freedom on Campus 1:15:201:20:24

I: The Daniels Campaign (00:1508:23)

KRISTOL: Hi, I’m Bill Kristol. Welcome back to CONVERSATIONS. My guest today is Mitch Daniels, an old friend. And I’m very honored to have you with us, Mitch. Such a distinguished and public life – recently the Governor of the great State of Indiana, now President of Purdue University there, before that Director of the Office of Management and Budget. I think we first met when you were a White House aide, when I first came to Washington 30 years ago. So thanks for being with us.

DANIELS: Appreciate being invited.

KRISTOL: Well, which of all these jobs was your favorite? Which did you enjoy the most?

DANIELS: Probably the one you didn’t mention, which was the longest job I ever had, which was in private business. Actually, two of them, running that was then a contract research organization, but mostly a long tour with the company Eli Lilly & Company, a pharmaceutical business.

I probably learned more there. I’ll say this, I’ve enjoyed each opportunity, but frequently I was asked later, “What previous experiences helped most to be an effective governor?,” that sort of thing. People would always expect me to name something from public life, but probably the experience in business, trying to manage for results, trying to get large numbers of people aligned and headed in a common direction, these were probably the most valuable days I spent.

KRISTOL: When were you there at Lilly in the 90s?

DANIELS: From about 1990 to 2001.

KRISTOL: Wow, a long stretch. And what was the most memorable thing you accomplished? I mean, what – I’ve never been really in the private sector, the real private sector. Obviously, The Weekly Standard is a for-profit magazine, but not a profit-making part of the private sector. So what would I be surprised about? What’s the most striking?

DANIELS: Well, you know, as in other jobs, I tend to remember the things that I wasn’t satisfied with and didn’t go well and there were definitely some of those. Made some investments in things were probably either before their time or maybe just ill-conceived. There were also some great challenges. Lilly, to this day, remains, as far as I know, the single company, which survived a huge patent expiration without a company-changing experience. They didn’t fold, they weren’t merged, they weren’t forced to acquire someone else. That was an assignment, I had to organize the company for the expiration of Prozac, which is a product you’ll remember.

KRISTOL: And what – and how did you survive? What was the key?

DANIELS: Well, it was the combination of many, many things. Roamed the world. First, the course economies, trying to prepare for expense reductions at the right time. Licensing in products that could somewhat offset the revenue loss that we were going to have. And, you know, it was only achieved through literally a global effort to smooth what would otherwise have been a fatal dip.

KRISTOL: You’re in the public sector; as you know people always say, or often say, it’s so hard to accomplish things in government because of all the rules and regulation, Congress, the media, civil service rules. But in the private sector you can make things happen easily. Is that true? I’ve always wondered how.

DANIELS: Well, certainly more true. But we never, certainly in the gubernatorial experience, never surrendered to the idea that things were fated to be either impossible or impossibly slow.

I think, enjoyed a number of successes that people found surprising. We were very fortunate and instrumental in that becoming so it was that we brought a lot – we were bale to bring a lot of people who did have private-sector experience and I was told recently that at something just around 20 percent this current Administration has the fewest people with any, a day experience in the private sector of any in American history. And ours was quite the reverse of that. We followed a 16-year period in which the other team had been in charge.

We’re able bring a host of people who didn’t understand why things couldn’t be done and were used to operating on a much faster clock speed.

KRISTOL: So let’s go back to that. So you ran for governor of Indiana in 2004, and Democrats had had the governorship for –?

DANIELS: 16 years.

KRISTOL: And why did you run? You hadn’t run for elective office before?

DANIELS: No, I’ll go to my maker saying, I only ever ran for one. Yes, I can’t claim then or in any previous or following experience that I planned anything. In that case, I had left Lilly. To my own surprise, I was asked to come to the Bush 43 Administration. Did so and was grateful for that opportunity. When I had done what I thought was enough and I was eager to get back home where my family was –

KRISTOL: You were Director of the Office of Management and Budget, which is a very important job.

DANIELS: ’01 to ’03.

KRISTOL: Trying to keep the federal budget under control.

DANIELS: And regulations and was a momentous time, of course, 9/11 attacks and all that. But when I thought I’d done enough and went and got my honorable discharge at about that same time a number of people at home were very restless that they thought our state was not being as well served as it could be, not moving forward. And came and asked me to consider something I really had not ever thought taken seriously and I fell for it.

KRISTOL: So what happen? You went back – well, you were moving back to Indiana, anyway.

DANIELS: I was determined to move back anyway, and it was in the summer of ’03. And so I agreed to give it a try, hit the road for 16 months. People back home still remember that as an unusual campaign. We got an Indiana-built RV, sort of the entry-level model and beat it to death, taking it places it wasn’t meant to go to.

KRISTOL: Didn’t you stay in people’s houses?

DANIELS: Started doing that to save money, discovered it was a great way to learn more, develop stories, and things you could share with other people. And I continued that through all eight years I was Governor by the way. Would have been a good book, if I’d kept better notes of those. 125 nights in strangers’ homes is an interesting way to learn your way around the state.

KRISTOL: Any one or two memorable moments?

DANIELS: Dozens. But you know couldn’t get the – couldn’t make the shower work and had to take the first bath since I was eight years old and things like that.

The serious thing I recall about that was I thought, first of all, I would need to do that as a no-name, first-time candidate, but second I thought it would be a important thing to do as a Republican candidate to confound the stereotype, which in most cases is unfair and inaccurate, that you know Republicans don’t understand and connect and empathize with average people.

And I had told a lot of friends who had been office-holders or candidates – “Don’t just complain about it, go out and refute it.” But, most of them didn’t take me upon that advice, but anyway when, to my surprise, I found myself a candidate, we went out and did it. I think it worked very well. I will say this, Lamar Alexander gave me a good point, I told him a few months in what I was doing and he said, “That’s really good,” he said, “It’ll probably make you a better candidate, but it will certainly make you a better Governor.” And he was right.

II: Governor of Indiana (08:2330:33)

KRISTOL: So you’re Governor of Indiana, it’s January 1st or whenever the term begins in Indiana of 2005, and slow recovery from the recession, I suppose, there as elsewhere in the country. What do you do? I myself would be fascinated – how did you decide what to do as Governor?

DANIELS: Well, let me start with a confession. I can still remember to my embarrassment in the early days of ’03 when we hit the road I said to people, “Look, we’re going to keep this simple, stupid.” We’re just going to say, “16 years is long enough, state’s going nowhere, it’s broke,” which it was, “Things are broken,” which they were. “Time for change.” Fin.

It didn’t take me very long, Bill, to realize that was not a responsible way to go about it. And along the way I began to collect some ideas, my own thoughts became better formed as I became better informed and we began to enunciate things we would do if elected. In fact, by the time we got elected, it was a list longer than any sensible citizen would want to study, but we took that very seriously, and it was a lesson I carried on for eight years, which was that if you want to make big change, if you really want – first of all, don’t seek public office if it’s not something you really want to do. President Reagan used to say, “Some people run for office to be something, and some people run to do something.”

Still an important place to start. And, so we in January of 2005, we had a very explicit program of fiscal change and reorganizing the state’s – all the furniture we could to make us the most job-friendly, investment-friendly, business-friendly state in America. The state needed huge improvement of its ethical rules of the road. And a host of other reforms.

And so I took out of that and tried to continue there on the lesson that much better to be very clear with people about what you intend to do, play with the cards face up, and then if you happen to win an election, you have every basis on which to proceed and try to make those things real.

KRISTOL: You were so successful as Governor, and you have such a strong record, by the end of accomplishments that I think people have forgotten, and I myself don’t even remember in every case the hurdles and the challenges. It’s not like Indiana, in 16 years of Democrats in power, sort of a lot of entrenched interest in the state legislature, that didn’t automatically bow because you were the newly elected Governor, right? There were plenty of Republican legislators that had been there when you were – gallivanting around Washington.

DANIELS: They thought they were the adults running the place, they weren’t interested in really any Governor taking too much of a hand.

KRISTOL: Was there some moment of first few months, the first year, where you really sort of, you know, kind of air-traffic-controller moment or a moment of truth where you really felt like you shown you could get your way and make a fundamental change and it was working? How does all that work?

DANIELS: Couple of them. First of all, we acted as fast as we could by executive order, those are I think under some deserved ill repute, these days here. But I think we used it responsibly. In one of the first ones for instance, I created the new economic development agency, then we went to the legislature and asked them to codify it, which they did. Also on that first day I struck down the existing executive order, which for 16 years had compelled state employees to pay union dues. That got people’s attention.

I’ve freely confessed over the years since I almost flinched from doing that because I was worried that we might have a Madison-like explosion, referring to the one more recently in Wisconsin. That might obviate or get in the way of all this other agenda that we’d were so hopeful of enacting. But that did not occur as it turned out, and we were able – that was really important, because we were able to start reorganizing state government.

KRISTOL: And why didn’t it? I think you’re too modest when you put it in the passive tense. Why didn’t you go about as a matter of political governance to try to ensure that it doesn’t occur that you don’t get an explosion – Did you make it work with different media? Legislators?

DANIELS: Not in this case. What I did talk to everybody right as the election got closer and then particularly in the interval before inauguration, and I must say, I’ve admitted it elsewhere, on this particular one, I was very torn. I thought maybe I should at least postpone any action, or maybe we can find some halfway measure, we’ll do it in these departments and not these. In the end, I was persuaded that in order to make government work effectively, and it was very dysfunctional, I have to say, at the time. I used to say, “You couldn’t move this coffee cup from here to here without a 60-day consultation, 160 pages of do’s and don’ts.”

That was very important. We began immediately to consolidate departments that should be, pull other departments out for individual focus and attention, and get started on the, on the path to really making government work. I’ve always felt strongly that we can argue about the proper sphere of government, and obviously, I believe it should be dramatically more limited than it usually is these days. But inside that sphere, I think there’s a responsibility to make it work effectively, and that I think was really important.

But no, I told the union leadership myself, I thought I owed that to them, signed the order, pulled up the covers, held my breath and nothing happened, except over the first 10 months, 90-plus percent of the employees, stopped paying the dues. Which told you something.

Another one, which only I suppose people from Indiana will fully understand, but well down the list in that first, that big first agenda people were writing stories about “Hurricane Mitch,” it was much busier than anybody had remembered, government being. Well down the list was a bill to place Indiana on Daylight Saving Time. We were one of two states in the country where you never knew what time it was.

KRISTOL: It was confusing going to Indiana.

DANIELS: Totally confusing. You know, “What month is this? Are you on Eastern Time?” And by the way, the state was in pieces, some was one, some were the other. That was only mildly irritating in the pre-digital era, but in a wired world, a global communicating world, it was a material – I won’t say huge, but it was a material business detriment. So that one of many things but it had enormous symbolic importance.

And it just, if it were in my judgment, five percent of the agenda, it got 50 percent of the attention. Everybody had a viewpoint. But the reason it was, I thought, significant was that the biggest obstacle, you asked about, I would say was cultural in that Indiana was not accustomed to change, was not accustomed to innovation or leadership. If you read any of the histories of our state, whatever else they say they will tend to say we’ve been conservative in that sense. Let someone else try it, good enough is good enough, and our entire appeal from the first campaign to the last day was that we want to be a leadership state, a vanguard state.

And, I think when we passed that silly bill on Daylight Saving Time, I say silly in the sense that it wasn’t as important as people treated it, it woke people up. They said, well – people said they’ll never change that and I think that little breakthrough which was by one vote.

KRISTOL: Oh is that right?

DANIELS: Was very dramatic. Probably sent a signal that said things are really different, and then we tried never to slow down after that.

KRISTOL: It seemed to me watching from a distance that you went against what I would say was the conventional wisdom among some political advisor types and friends of ours, which would have been, “Focus on two or three things that you know, don’t try to do everything, you really need to save your capital and really go after two or three big changes,” but the “Hurricane Mitch” thing really referred to the notion that you were doing 30 things at once.

DANIELS: Well, we did a lot. I mean, there’s obviously, some were much more important than others.

KRISTOL: You did not do certain things on the theory that, you know, “I only have so much time and effort.” It seems like you did try – was it easier almost to do everything, in a funny way, than to be selective?

DANIELS: Maybe so, and I could cite you examples from later on in which we did things in a sequence or waited a year on some things. Right to work’s the best example of that. But I came to the following view of the very useful metaphor, political capital.

Political capital, in my opinion – I think the metaphor is even strong in the way most people use it because it, capital, is not something to be husbanded and parsed out and then it’s gone. Capital is something you invest, if you invest it widely it brings a return, and then you have more capital and you try to invest on the next round and that’s the way we looked at it. And I think that’s the experience we had. We did a number of things that were controversial at the time, some were highly unpopular for a time, but –

KRISTOL: What was the most unpopular?

DANIELS: Possibly the least of – the Indiana toll road.

KRISTOL: Why was that unpopular?

DANIELS: Well, it was misunderstood and, you know, actively used by the opposition to suggest to people we somehow forfeited some of the state’s sovereignty or something.

KRISTOL: Well, you leased the tolls?

DANIELS: We leased the existing toll road and got a spectacular deal.

KRISTOL: Was it a foreign company? Was it part of it, as I recall?

DANIELS: Well, the financial consortium was organized by an Australian bank, the dreaded Australians, but most of the investors were American pension funds and universities and things like that. But you know some people misunderstood and thought maybe we’d somehow turned over a piece of our sovereignty.

But over time people saw the biggest road build, transportation infrastructure in America without a penny of borrowing, without a penny of taxation. Saw roads that people had said, “That will never happened,” roads and bridges and other facilities being built.

And we’re fair-minded enough about it that later on it simply wasn’t an issue, except a positive issue for us. And so to me that was an example of an investment of capital and something that worked out very, very well and paid off.

What you hope is that you can build confidence, enough confidence. I think is true whether you believe in very limited government as I do, or if you believe honestly in more expansive government, who’s in favor of incompetent government? And if you are able to demonstrate a degree of effectiveness and success, then people cut you a little slack when you come along with the next new idea.

KRISTOL: You need to succeed somewhat early on, I think.

DANIELS: Well, we thought so, it’s clearly true –

KRISTOL: Was it clear to you – when was it clear to people? Was there a moment where you thought to yourself, “You know what we’re winning, we’re going to be able to pull this off?”

DANIELS: It was probably – I mean, there were some glum days. I will say when this or somebody takes a poll here and there and it doesn’t look too good, but I would say as we got into year four many, many things were strong enough.

I mean, the state had been broke and now we got our first AAA credit rating ever and – oh, a favorite example is we worked very hard on the Bureau of Motor Vehicles, brought in one of these private-sector people, he’d been running a big sporting retailer operation and it got sold and it was in between, tricked him into coming in and he’d never imagined being in government.

KRISTOL: So he had no experience running Bureau of Motor Vehicles?

DANIELS: That’s right but he had run – we looked at and we said, “What is that?” It’s 170 retail outlets, walk-in traffic, cash transactions. Well, I was really determined – first of all, we must have and the worse one in the country. Everybody hates their DMV but on top of interminable waits and lines, I used to say people took a box lunch and copy of War and Peace in and hoped they didn’t finish them both before their number came up. But on top of that there was the biggest phone ID ring in America was running out the backdoor of Indiana license branches so there was fraud problems, too.

But that’s something that every citizen deals with and so we said, “Let’s put a huge priority on that.” After a few years, it was wining the international award; it did it two or three times in a row. I’d get a report every month, average total visit time every month fell below 10 minutes by our sixth or seventh year, if you had to go at all. And so, I could give you many other examples but we were very fixed on the idea of showing real progress and I think by the time we got into that fourth year, the story was a pretty strong one. That began to reflect itself politically.

KRISTOL: I mean, you have great statistics, some macro-statistics on how well Indiana, which you should probably give our viewers some sense of since 95 percent of them don’t live there. I mean, I know the story, but I’m also struck by how much to – I guess your point it’s the actual experience of the citizens that maybe is as important as them hearing that the economy’s better or the government spending is –

DANIELS: Most citizens don’t have the time to parse through all the statistics, and they’ll hear conflicting things but they can see with their own, with their own eyes. As in many cases they can. If their tax refund comes back twice as fast as it used to, then maybe they thing something real is going on.

KRISTOL: But actually under your Governorship for eight years, as I recall, state employment went down by quite a lot. State spending maybe was –

DANIELS: Well, Indiana has the – far as I know, still has – the fewest state employees per capita in the country. That doesn’t mean it’s necessarily doing so many fewer things, we had a case-by-case philosophy of looking to see whether we could operate through private means, always case by case.

I can cite instances in which we added to the workforce of existing government. Child protection is a good example. We added 1,000 case workers so that the caseloads would be small enough and children could be better protected. We added state police.

But on the other hand, if we found that, I said, “If we can hire Hoosiers in the private sector to do something as well or better as and less expensively, why wouldn’t you?” And we did.

KRISTOL: And state spending, as I recall, you didn’t go up as nearly –

DANIELS: Depending how you measure it, clearly one of the least expensive states, consequently Texas as lower than elsewhere.

You know, I never – I think fiscal responsibility is a basic judiciary task. It’s not the be-all and end-all. For us, the central goal, when that group of newcomers I talked about – we first assembled them in a hotel room, the first 80 or 90 people that had agreed to come in and serve, and again, almost none of them had any governmental experience.

KRISTOL: And these were very senior levels?

DANIELS: Sometimes. We had early retirees, we had 40-year-olds who had sold a company and were in between, we had some young tigers. But I said to them, “Look, any great business or endeavor I ever saw had a very clear purpose, and everyone in the organization knew what it was. It was on the laminated ID card, or it was on the wall, it’s on the annual report, everybody understood it, and their role in producing it.” I said, “Okay, here’s ours: We want to raise the disposable income of Hoosiers.”

In falling for 40 or 50 years, at least in relative terms, and so wherever you’re working we’re going to be asking, “What can you and your unit do or do faster or do better or maybe stop doing that makes it more likely the next job comes here or not Illinois or somewhere else and overtime that those jobs pay better than the jobs of today?”

And then we’re going to try to run the people’s business and all these agencies we’re asking you to clean up such that we leave more of those dollars in the pockets of the people that earned them, the disposable perk. I said that’s it. Well, for eight years that remained our objective, progress was slow, and recessions get in the way, and it’s hard work.

But I, but we never lost – that was always our purpose and if you believe that maybe government’s central purpose, after public safety, is to enable the private world that mattered, the one that matters, to flourish then that was, I think, a defensible way to organize things.

KRISTOL: That’s great. Any one achievement you’re most proud of or you sort of wouldn’t anticipated achieving? Any big disappointment?

DANIELS: There are some things that worry me a little. The achievement I always hoped would endure, gave a lot speeches about it, my second inaugural, which I tired to make as short as Lincoln’s, I missed by about six words. I later decided that’s just fine, I can’t match his wisdom, I can’t match his eloquence, why should I match his brevity?

That was entirely devoted to the theme of “Can we become a state which not only accepts innovation and looks for opportunities to change but is determined, will hold it’s public leadership to that standard?” I can’t tell if that’s happened. It could be that our approach will not be the pattern in the future.

Also, in ’11, 2011, we passed a sweeping set of education reforms, and we’d done some things along the way, anything we could find, we were dealing with a divided legislature, and there were some things our Democratic friends just wouldn’t go for but we got a few good things done. But in 2011, having had a big victory we were able to pass a lot of things, and people continued to praise that package as the most far-reaching, but it’s not clear to me that it will be implemented. The system still resists change and can find ways evade it even though good laws are on the books so we’ll see.

KRISTOL: People forget also that one thing – Indiana is a Republican state, but you say, 16 years of Democratic governors before you, and what a divided legislature for most of your tenure?

DANIELS: Half of it.

KRISTOL: Half of it.

DANIELS: We had a unified legislature for the first two years, divided for four, and then recaptured the House we didn’t have for the last two. One thing that I do remember fondly about the experience, I was very apprehensive that we would run out of gas, either ideas or the political wherewithal to achieve them. And I’m very happy that that did not happen.

We were still doing very big things in year seven. Education being part of that. And year eight. We passed Right to Work in year eight, we repealed the inheritance tax in year eight, we fixed the unemployment system, which was suffering the effects of the recession in year eight and several other things. The duck never got lame, and that was a good way to finish, I thought, our time and our chapter.

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