Saving America By Trusting Americans by Mitch Daniels

    I was out hiking on the Big Dry Creek Trail this week while listening to Indiana Governor Mitch Daniel’s audio book, Keeping the Republic: Saving America By Trusting Americans.   Daniels was a staffer in the Reagan Administration and a budget director for George W. Bush.  In 2004, Daniels was elected governor of Indiana where he eked out a victory.  He is now in his second term as governor.  This year he considered a run as a Republican candidate for President but decided against it.  His book doesn’t focus on his government or political career.  He hasn’t written the book as a theoretical treatise or a partisan diatribe. It is more of a discussion of who is the boss, i.e. the government or the governed. He makes the point that we are at the financial limit and politics has to be adjusted to meet the challenge of holding reasoned discourse -- regardless of one's political persuasion. 

    The context of the book is mostly about how, in a primarily democrat state, a governor could persuade the state government to do a better job for its employers (the taxpayers). These efforts resulted in turning a $700 million deficit into a $1.3 billion surplus in his first four years by improving government services and creating private sector jobs. The turnaround was due to adjustments in points-of-view by many stakeholders. Incidentally, his second term was won by a 58% to 40% margin -- larger than his first term by 6% points. Daniels’ book is an exposition about how it was done in his state and the implications for the Nation. 

    The governor introduces three principles:  provide incentives to state employees, treat citizens like adults, don’t spend money you don't have.  He then  proceeds to demonstrate how his administration in Indiana put these principals into action with stellar results.

    Indiana had deep fiscal problems. Many steps were taken, such as: outsourced prison meals to catering services, speeded review of environmental permits (some of which had been pending for years), radically reduced wait times at the department of motor vehicles, raised billions for state roads by leasing the Indiana Turnpike to a private operator, cut local property taxes, abolished government union agreements that had made it virtually impossible to reorganize operations, and permitted parents to send their children to schools in any district. There was ample opposition, but the reforms worked and voters reelected Daniels by a wide margin in 2008. When the recession hit, AAA-rated Indiana rode out the downturn very comfortably while most states were struggling. Daniels says, "Halfway through my second term, a reporter asked me how we had turned things around. 'Prepare to be dazzled,' I said. 'We spent less money that we took in.'" 

    Daniels also talks about his insight into the problems facing our entire country which include deficits, a toxic atmosphere in politics, and a sense by many citizens of entitlement rather than responsibility. As a former Head of the Office of Management and Budget in Washington, DC, the Governor speaks with authority about our country's financial crisis.  He  lays out in stark terms the threat the American Republic faces if government spending is not brought under control.
    At the national level, as Daniels sees it, the key challenges include: (1) Balancing the federal budget because the need to tame the $14 trillion deficit (which he calls the "Red Menace") is a matter of arithmetic. (2) Supporting rather than blocking economic growth, because without growth it will be tough to balance the budget or accomplish much of anything else. (3) Reconciling the regulatory mindset and environmental purity with the practical realities of a robust economy.

    We face, Daniels said, "a survival-level threat to the America we have known."  The problem can be summed up as debt. Recent Republican and Democrat presidents have put us on the path to double the national debt as a percentage of gross domestic product, bringing it to levels that have proved unsustainable.  Daniels put it this way. Debt service will permanently stunt the growth of the economy. And that will be followed by a loss of leadership in the world, because "nobody follows a pauper."  That growth in debt will continue to be driven by growth in programs labeled entitlements -- though Daniels objects to that term. Congress, after all, can vote to cancel entitlement programs and deny promised benefits any time it wants.

    Daniels favors changes in Social Security and Medicare for tomorrow's seniors that will give them choices and market incentives in building retirement income and seeking medical care. He insists that "average folks can make good consumerist decisions" and rejects the premise held by liberals from the New Deal to today that they can't be trusted to navigate their way in our complex society. 

    The governor is also concerned with  the causes of our country's constantly escalating health care costs.  He says the heart of the problem is the fact that consumers of medical care do not themselves pay for the medical services they utilize and the costs engendered by defensive medicine due to fear of malpractice suits. 

    Daniels laments that the Republicans running for president “have not yet stepped out on these issues.”  He says that he is "a little concerned that our nominee might decide, 'I'll just play it safe and get elected as the default option'" to an incumbent discredited by obvious policy failures.   He states, "My question then is what matters -- winning or establishing the base that enables you to make big gains?”  The question is whether the Republican candidates will dare to, in Daniel's words, "speak grownup to citizens."

    As for specific policy changes, he proposes the idea of reforming Medicare benefits by means testing and raising the retirement age.   He also favors a value added tax which might raise more revenue, and a "negative income tax" which could replace more targeted benefits (food stamps, earned income tax credit, low income housing subsidies, etc).  Such measures should rein in the burgeoning welfare state of which Daniels complains. Empowering the president to impound unspent funds (as Daniels was able to do in Indiana) might involve some pluses, but it might not be an easy sell.

    His most telling point is that the public needs to demand a change in attitude from a government that wants to be in charge of everything to a government that is trying to help people succeed.  From "yes, we can" to "yes, you can." From, "change you can believe in" to "change that believes in you." Otherwise, elitist government officials will be all too happy to treat people like children and make their decisions for them - effectively ending the American experiment in self government.

    The point he makes most strongly is our need to free up the private sector. Only with strong private sector growth can we generate the tax revenue necessary to pay our bills. And if we cannot pay our bills we are done and the American Dream will be over.

    As an Indiana Governor with a record of success, a commitment to open and civil discourse, and a philosophy of trust in the people, limited government, fiscal responsibility, economic growth, and liberty as the highest value, would by now be a commanding presence in the Republican Presidential sweepstakes. And he surely would have been, had he (and his family) not decided to stay out of the race. I regret that Americans won't get to see Daniels in action, but I hope the eventual winner reads this book.

    Daniels delivers focus, clarity and pragmatism that goes to the heart of what matters: our national fabric and our economic viability. And the book practices what it affirms: its tone is respectful, even friendly, speaking to the reader as a fellow citizen

    Washington may have lost its way, but it's reassuring to know there are still a few good leaders with clear ideas, guts and a stubborn belief in our intrinsic capacity as citizens, communities and as a country to change our reckless spending habits. 

    The book is written by a "level headed" politician who speaks as someone who Is walking the talk. For those with strong ideologies (Right or Left), he successfully allows their views into the discussion and for those who are complacent, he offers a well thought out call to action. 

    Daniels captures the essence of what this country faces in the immediate future and details in an often witty manner what must be done to insure that the next generation has the opportunity to experience life, liberty and the pursuit of happiness for those who believe that our Republic is worth keeping

    Mitch Daniels is a Harley-riding, Princeton-educated governor of Indiana who has written a highly readable book on the challenges facing our country and some common sense ideas for fixing what ails us. This could have been the usual self-aggrandizing drivel that we often hear from politicians. But it's not. Daniels thinks with great clarity and writes with both rationality and good humor.

    Americans of every political stripe would do well to listen to what he has to say.