a PAW web exclusive column
4 , 2001:
By Louis Jacobson '92
at his Indianapolis home after he got the nod.
(Photo: Michael Bunch/The Indianapolis Star)
In late December, when
President-elect George W. Bush tapped Mitchell E. Daniels Jr. '71
to take the helm at the Office of Management and Budget, the news
barely registered in the media. As it happened, Bush had announced
two other appointments the very same day -- the controversial John
Ashcroft as attorney general and the well-known Christine Todd Whitman
as Environmental Protection Agency administrator. The muted reaction,
however, was eerily appropriate. OMB and Daniels both have a reputation
for being influential in a low-profile way.
OMB's portfolio in Washington
runs the gamut -- it does everything from producing economic forecasts
to managing the federal bureaucracy and overseeing federal regulations
of all types. But first and foremost, OMB is the administration's
chief crafter of the federal budget, as well as its negotiator with
Congress on budget details. In recent years, the agency has been
led by a series of strong-willed (and often controversial) directors,
from David Stockman and Richard Darman during the Reagan-Bush years
to Leon Panetta, Alice Rivlin, and Franklin Raines under President
Each OMB director has
served as the administration's main advocate -- sometimes publicly,
more often privately -- for core priorities on spending and regulation.
Those who know Daniels -- who was confirmed unanimously by the Senate
-- expect him to be a good fit for the job. "He's absolutely a straight
shooter, and very practical," said Victor Schwartz, a senior partner
with the Washington-based law firm Crowell & Moring who once
taught Daniels in a law class. "He's very bright, but he isn't arrogant
or supercilious like some people as bright as he is."
Though Daniels isn't
quite "little known" in Washington -- a phrase the New York Times
used the day after he was appointed -- sources acknowledge that
Daniels, who moved to Indiana when he was 11, wasn't even thought
to be the top Hoosier in contention for the job. (Ex-congressman
David McIntosh was.) To take the OMB job, Daniels, 51, gave up a
lot: a post as senior vice president of corporate strategy and policy
at drugmaker Eli Lilly and Co., where he had spent the past decade,
and the chance to spend most of his time in Indianapolis, where
his ties run deep.
"The insidious part
about it is that OMB is the one job they could have offered me that
I would have considered," Daniels said in a March 16 interview.
So broad are the OMB's powers, he said, that "it is a place where
a person can be useful all day long."
The first two months
of Daniels's tenure proved to be a rat race. With Bush's election
quagmire forcing a delayed transition, Daniels settled into his
job several weeks later than most of his predecessors had -- yet
he still faced tight deadlines for preparing the details of Bush's
ambitious tax cut. "What I'll say about those first two months is
that I'm not eager to repeat them," Daniels said. "It was pretty
much 24-7, as they say. But, boy, was it illuminating and, in the
end, an exhilarating experience."
Truth teller or team
During the crunch period,
Daniels said, he met with Bush face to face about five times a week.
He said that his relations with Bush have been warm, even though
the two men didn't know each other very well before Bush was elected.
Asked whether the OMB job requires a truth-teller or a team player,
Daniels said that the answer "has to be both. I'd hope that it's
no different than any other job. A person assigned this kind of
responsibility is duty-bound to tell the truth, but then once a
decision is made, you'd better be fully on the team."
At Princeton, Daniels
took a meandering path. Though he was a Woodrow Wilson School major
and occasionally took part in Young Republican activities, "truth
be told, my spare time was mostly spent refining my pool, bridge,
and poker skills" at Charter Club and other campus haunts, he said.
"I think in those days -- it's hard to remember now -- but I was
probably supportive of multiple and diametrically opposed viewpoints."
Some of Daniels' college
experiences became dramatically public in 1989, when he was serving
as an informal adviser to Vice President (and fellow Hoosier) Dan
Quayle. In a Washington Post op-ed piece, Daniels acknowledged that
he had smoked marijuana and drank beer heavily as an undergraduate,
until he was arrested for marijuana possession in 1970. Daniels
wrote the admission in an attempt to explain the tough-on-crime
views he shared with Quayle. In his column, Daniels noted that he
had pleaded guilty and paid the $350 fine, and that he had also
come clean about his record with every subsequent employer. Politicos
agree that Daniels suffered no damage from his admission.
Daniels's most important
Princeton connection turned out to be Bill Ruckelshaus '55, who
ran for Senate from Indiana in 1968, between Daniels's freshman
and sophomore year. Daniels volunteered for the Ruckelshaus campaign
during the summer, and later got permission from the university
to continue as a campaign staffer through the fall. (He had enough
advanced-placement credits to qualify for graduation after seven
semesters.) Though Ruckelshaus lost a close race, Daniels learned
the ropes in Indiana politics.
After graduation, Daniels's
apprenticed himself to Richard Lugar, a widely respected Republican
who served as mayor of Indianapolis and later as senator from Indiana
-- a job Lugar still holds. As a Lugar aide, Daniels helped craft
an unusual merger of city and county governments in Indianapolis
and later managed Lugar's senate campaign, as well as his Washington
office and the Republican campaign committee Lugar chaired.
In 1985 the Reagan White
House installed Daniels as political director. But by 1987, Daniels
resigned in an epic struggle with White House chief of staff Donald
Regan. Daniels suggested that Regan step down in order to stem the
political fallout from the Iran-Contra affair. Regan refused, and
Daniels left instead, joining the Hudson Institute, a conservative
think tank with offices in Indianapolis and Washington.
Back in Indiana, Daniels
became a political player of the highest rank. "Mitch has a very
low profile among the general public, but he is a member of the
bipartisan group of behind-the-scenes movers and shakers that make
the city of Indianapolis tick," says Ed Feigenbaum, a onetime colleague
of Daniels at Hudson who now publishes Indiana Legislative Insight,
a political newsletter. "A trip to visit Mitch is a must for any
potential statewide candidate. There is no one else in Indiana who
is able to blend Mitch's policy and political skills the way that
he has, and, combined with his unparalleled national contacts, it
makes him a unique figure."
At Lilly -- where the
board of directors once included the first President Bush -- Daniels
played a key role in managing the public-policy issues surrounding
Prozac, the company's profitable antidepressant medication. One
of the most contentious issues was criticism of the drug by the
Church of Scientology. "His work at Lilly is not to be underestimated,"
Feigenbaum says. "Without being too flip about it, he kept the world
safe for Prozac. He put his neck on the line -- not just the company's
-- in defending Lilly's claims."
Indeed, Daniels says
that his time at Lilly may have been his most important preparation
for the OMB job. "I spent much of that time running a multi-billion-dollar
business unit and helping to plan a $12 billion global corporation,"
he said. "I think my 14 years in business have been more valuable
[to the OMB job] than anything I did in public life."
Challenges of the
At OMB, Daniels faces
two major challenges, says Roy T. Meyers, a political scientist
and budget expert at the University of Maryland-Baltimore County.
The first is to set aside, in a widely accepted way, his prior affiliation
with the pharmaceutical industry, which has definite preferences
in federal budgeting -- particularly the price that Medicare pays
for prescription drugs. The second challenge, Meyers said, is to
learn the intricacies of the federal budgeting process -- an obscure
realm that Daniels, unlike several of his OMB predecessors, has
never had to master until now.
By March, Daniels said
that he felt comfortable in the budget universe. "Only time will
tell if I was a wise choice for the job, but I don't think that
a professional budgeteer would have been the best choice," he said.
"There's just more to the job than that. I do think [the community
of budget experts] is a bit of an insider's club, and I think they
were surprised to see someone from the outside get the job. I said
to someone recently -- maybe a bit uncharitably -- that it was like
an old-boys' squash club that had a racketball player from the ëY'
show up. They looked askance. But the career professionals at OMB
and the information machine they operate is such that an OMB director
can learn an enormous amount in a short time."
A Republican to build
Daniels receives respect
on both sides of the aisle. While he boasts credentials, such as
his tenure at Hudson, that are acceptable to conservative Republicans,
he has also taken a strong personal interest in the challenges facing
inner-city Indianapolis, where few conservative Republicans reside.
Daniels played a key role in establishing the Oaks Academy, a racially
diverse inner-city private school with a rigorous educational standards.
He has also been involved in the Tabernacle Presbyterian Church,
a socially active church in a poor neighborhood of Indianapolis.
Timothy Powers, a Republican
lobbyist who worked with Daniels on issues affecting Lilly, says
that Daniels's personality "is a very close fit to the President's.
He's one of those guys who doesn't alienate people ideologically.
In meetings, even though he's very Republican, he understands the
fine art of building bridges to the other side."
Asked what his ideology
is, Daniels said that "by today's common and somewhat tired definition,
I'm a conservative. But I was very drawn to the themes of the Bush
campaign, even though I was not part of it. I have always felt that
conservatives have failed utterly to seize their most important
opportunity -- to assert conservative principles on the grounds
that they actually serve society's least advantaged citizens. Conservatives
should go toe to toe with 40 years of failure and submit that the
best test of a just society is how it does by its least-advantaged
To the Bush Administration's
chagrin, an economic downturn hit hard just as Daniels and his fellow
cabinet members were settling into their jobs. While Daniels notes
that OMB's projections take into account future economic uncertainties,
he acknowledges that "a prolonged economic downturn would change
some of the numbers." Still, he applauds the president for thinking
"I'm glad to be part
of an administration that did big things after an era of miniaturization"
under Clinton, he said. "This is a President who's set out after
big objectives. People are talking about tax cuts, but it goes beyond
that, to Medicare reform, Social Security, national security. Those
are big goals, and any one of them would be a signature accomplishment.
I told one group here recently that if you're not going to hunt
the big game, don't go on the safari. This is a President and an
administration that is certainly after big game."
For now, Daniels travels
to Indianapolis when he can, to see his family -- his wife, Cheri,
two college-age daughters, and two high-school-age daughters. "I
like to rationalize that it's useful for a cabinet officer to live
where people still think a trillion dollars is a lot of money,"
he says. "But the first two months I was scarcely there at all.
It looks as though I can probably average two visits a month, and
maybe do some visits that are a few days at time."
Then again, there are
some positives, he acknowledges. "My oldest daughter and her best
friend were visiting recently, and by surprise yesterday, the President
had me bring them by for a guided tour of the Oval Office," he says.
"So at least my girls will be able to see a few things that not
everybody gets to see." -- Louis Jacobson '92
Louis Jacobson is a staff
correspondent at National Journal magazine in Washington.