Mitch Daniels Wasn't Always Concerned With Debt

mitch-daniels.jpgThe Washington Post's Dan Balz presents Indiana Gov. Mitch Daniels as the debt crusader's debt crusader:

No prospective Republican presidential candidate has done more to highlight the issue of debt and deficits than Indiana Gov. Mitch Daniels. He calls it the “new red menace,” an ocean of red ink that he says is every bit as dangerous as the Soviet nuclear threat during the Cold War.

His call to arms gives him a provocative though politically risky platform for a potential 2012 presidential candidacy. Daniels thinks dealing with the debt problem will require a potentially dramatic restructuring of Medicare for future recipients, revamping Medicaid to slow its spending, and altering Social Security for today’s younger workers by raising the retirement age and recalculating the cost-of-living formula.

What Daniels has long been advocating dovetails with the budget blueprint recently unveiled by House Budget Committee Chairman Paul Ryan (R-Wis.). His entry into the race could ensure that a debate between President Obama and Ryan becomes a central issue of the 2012 campaign. More than any other potential candidate, Daniels would test whether voters are ready for the kind of stiff medicine he prescribes.

Balz mentions this, and gives it short thrift, but before his current stint as governor, Daniels served as director of the Office of Management and Budget for the first two and a half years of George W. Bush's presidency. Two things from his tenure stand out: First, he shepherded the administration's huge tax cuts on higher earners and oversaw a federal budget that turned a $236 billion surplus into a $400 billion deficit. Second, and more important, he badly underestimated the cost of the Iraq War, offering an estimate of $50 billion to $60 billion for the initial assault, and a forecast of $17 billion to $45 billion per year of occupation. At best -- if we extend those costs to the present -- Daniels was off by $2.5 trillion.

Of course, a lot of people were off in their cost projections for the Iraq War and the Bush tax cuts, and Daniels has had more than eight years to repudiate (or at least explain) his previous position. As it stands, however, Daniels has both pushed against critics for noting his tenure as OMB director and has consistently defended the Bush tax cuts, despite their outsized effect on federal finances. Far from showing independence or budget "seriousness," Daniels -- like his fellow traveler, Paul Ryan -- consistently acted out of ideological conviction and partisan loyalty. Insofar that he has a fiscal interest, it's in reducing tax rates for the wealthy.

Any Republican who runs for president will eventually shift to meet the preferences of the median Republican primary voter, which include a disregard for the fiscal consequences of GOP-favored policies. Mitch Daniels, luckily, has a record well-suited for the task.

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