INDIANAPOLIS - When it comes to the future of his state, Indiana Gov. Mitch Daniels (R) is thinking big. But his first term demonstrates how bold action might not be the surest ticket to a second term. The governor has ruffled so many feathers that two credible Democrats are raring to take him on in 2008.
Daniels, former director of the Office of Management and Budget under President George W. Bush, has pushed a series of controversial policies since ending a 16-year Democratic hold on the governor's office in 2004. His aim is to improve the economic competitiveness of his sagging industrial state.
"This was a state in which the average citizen out-earned the average American 40 years ago, in the heyday of manufacturing," Daniels said in a telephone interview. "I wanted it to be that state again. We knew it wouldn't be accomplished in one administration, but we wanted to get it started."
Daniels' constituents haven't exactly rewarded him with affection. A September WISH-TV Indiana Poll found his approval rating at 45 percent positive, 47 percent negative. Only 39 percent of respondents would definitely re-elect him, 37 percent would replace him and 21 percent would consider voting for an opponent.
"Hoosiers are resistant to change, even if it's good change," said Ed Feigenbaum, who publishes a political newsletter in Indianapolis.
Early on, Daniels convinced the Legislature - narrowly - to join most other states on Daylight Saving Time. Though aimed at streamlining logistics and boosting commerce, the shift led to a messy, county-by-county reassessment of which time zone to be in - Central or Eastern. The result was frustration with the governor for opening a Pandora's Box.
Daniels also sought to slash bureaucracy, bypassing the Legislature to close a host of motor vehicles offices - an unpopular idea in small towns and rural areas where his party is ordinarily strong.
And Daniels secured a deal, approved by just one vote in the state House, to lease the Indiana Toll Road to an Australian-Spanish consortium. The lease is set to bring in $3.8 billion that will be devoted to the state's transportation system, making Indiana "the only state in the nation that has a funded 10-year transportation plan," said state Republican Party communications director Robert Vane. Still, Hoosiers were skeptical of the 75-year term of the lease, the foreign status of the company and the bidding process.
But the governor has forged ahead. "The Daniels governorship has often done the absolute opposite of conventional wisdom, and the governor has told me several times he doesn't care about the short-term political fallout," said Brian Howey, who publishes a political newsletter in Indianapolis.
Daniels acknowledges his problem with public perception. "When you abruptly reduce spending, it will irritate a few people," he said in the interview. "But in my judgment, it needed to be done, and we did tell the state in advance what we were going to do. The biggest mistake would have been to walk
Some say that Daniels' leadership style is complicating his task. It often seems that Daniels only listens to constituents "after he realizes he can't get what he wants," Feigenbaum said. For example, soon after Daniels sprung his plan to build an outer beltway around Indianapolis primarily for commercial traffic, affected property owners came out in opposition. The proposal quickly drew the ire of legislators, including numerous Republicans, and the governor yanked it.
The backlash against his policies "didn't have to be this painful," said Indiana Democratic Party communications director Jennifer Wagner. "He should have sold it better. … He always asks for forgiveness, not permission."
Daniels concedes the assertion - up to a point. "We have moved maybe too fast for some people or on some occasions, and on the list - a long one - of things I should have done better, preparing the ground for certain actions might have been a good idea," he said. "Sometimes we had to choose between getting the job done and getting the P.R. done, and we chose the former."
Indiana could certainly use an economic shot in the arm. While unemployment is lower than it was two years ago, other indicators are not so rosy.
Median wages in Indiana have stagnated since 2001 and dropped slightly in 2006, according to the Institute for Working Families. Household income fell by about $4,000 in real dollars between 1999-2000 and 2005-2006, in part because the manufacturing sector shed 110,000 jobs from 2000 to 2007, according to the institute. Indiana now ranks second only to Ohio in home foreclosures, according to the Mortgage Bankers Association of America.
Daniels has lobbied hard, and successfully, for foreign investment. In early September he took his third trip to Asia. His courtship has drawn 28 Japanese businesses to locate or expand in the state, spending $1.3 billion and promising 5,500 new jobs. A Toyota plant in Lafayette is creating 1,000 jobs, and a Honda facility in Greensburg will employ 2,000.
As the new factory jobs accumulate, the time zone and toll road controversies seem to be "fading in the rearview mirror," said Bill Blomquist, a political scientist at Indiana University-Purdue University Indianapolis. Daniels has earned credit for cooperating with Democrats, who control the state House, to enact a cigarette tax hike that will help expand health-care benefits for low-income residents. The two sides also worked on full-day kindergarten, though some Democrats don't think the plan goes far enough.
As next year's election approaches, the deadliest issue for Daniels is likely the state's property tax. Over the past few decades, Indiana slowly has shifted the tax burden away from businesses and onto property owners.
The Republican-leaning north side of Indianapolis has been hit especially hard, said Democratic consultant Chris Sautter, who is advising former U.S. Rep. Jill Long Thompson (D-Ind.) in her bid against Daniels. "You can't pass a block without seeing half a dozen signs" bemoaning high taxes, Sautter said.
Daniels has appointed a panel headed by the man he defeated in 2004, then-Gov. Joe Kernan (D), and state Chief Justice Randall Shepherd to grapple with solutions to the property-tax issue. But there are risks for Daniels and the Legislature. If they don't come up with a long-term solution next year - right before the election - "there will be pitchforks in the streets," Howey said.
While Democrats are on a high nationally, and while the state party gets strong marks for energy and media savvy, its gubernatorial primary field is fractured. Architect and neophyte candidate Jim Schellinger, an experienced fund-raiser and party activist, has many party bigwigs in his corner, but he's facing Thompson, who's better-known. State Senate Minority Leader Richard Young withdrew in early October, citing the need for party cohesion if Democrats are going to beat Daniels.
No one here is writing off the governor. Indeed, in the WISH-TV poll, Daniels beat Thompson, the poll's best-performing Democrat, 46 percent to 38 percent head-to-head. The poll had a margin of error of plus or minus 3.5 percentage points. The key unknown is whether economic frustration will drive angry voters to seek change.
"I don't think Daniels has lost Indiana voters," said Michael (Mickey) Maurer, a communications and banking executive. "There is plenty of time to appeal to them between now and the next election.