Daniels says Dems can deal with deficits best

Howey Politics Indiana. By Mark Schoeff Jr.

Gov. Mitch Daniels came to Washington on Wednesday to proselytize about the urgent need to cut the federal deficit and debt while suggesting that those of the opposite political faith – Democrats – are more favorably positioned than his party to get the job done.

 “You’re better equipped than people who wear my uniform are to lead this drive back to solvency,” Daniels told Democrats in the audience at a dinner at the Newseum, where he was one of three recipients of the inaugural “Fiscy Awards” sponsored by Washington groups devoted to fiscal prudence.

Daniels said that voters give Democrats the benefit of the doubt as the more paternalistic party, which means it has more latitude to make major changes in federal spending. But that requires, in Daniels’ view, the emergence of Democratic leaders who will abandon the party’s tendency to promote government expansion.

Daniels spoke at a venue on Pennsylvania Avenue just blocks from the White House. He suggested that the current occupant, President Barack Obama, could achieve major advances in reducing the nearly $1.3 trillion federal deficit and the federal debt that’s approaching the $14.3 trillion mark that will require congressional action to raise the debt ceiling later this spring.

 “It may not be his view of what’s right,” Daniels said in an HPI interview after his remarks. “If he chose to, he’d be the most effective, and I’d lead the cheers.”

As he usually is during visits to Washington, Daniels was coy about whether he wants to run for president himself. “I’m a long way from any such decision,” Daniels said. “I’d like to contribute (to the political discourse). I’m working on the problems of Indiana.”

His success in transforming the state’s budget deficit to a surplus while reducing property taxes is the primary reason he was honored with a Fiscy by the Comeback America Initiative, the Committee for a Responsible Federal Budget, and the Concord Coalition.

 “This is a guy who taught us how to run a state,” said Rep. Paul Ryan, R-Wisconsin and another Fiscy recipient. Ryan was honored for outlining a plan to make structural changes in entitlement programs like Social Security and Medicare.

The other Fiscy winner, Sen. Kent Conrad, D-North Dakota, also praised Daniels’ leadership of Indiana. “We need more of it in this town,” Conrad said.

But the place where Conrad works, Capitol Hill, is likely to continue to be dysfunctional on fiscal issues. Conrad was part of a national deficit commission in which 11 of 18 members voted to approve in early December on a sweeping overhaul of the federal budget and tax system that would result in a $4 trillion reduction in projected deficits.

It’s unclear, however, whether the new Congress, riven by partisan divisions between a Republican House and Democratic Senate, will adopt any of the commission’s ideas.

While Congress struggles with fiscal matters, Daniels is not inclined to offer his own roadmap.

 “Nobody wants to hear a plan from me,” Daniels said. “When I’m asked questions, I give ‘for instances,’ I give examples.”

He said his open to any kind of plan that reduces the deficit.  “I’m going with anything that makes the math work,” Daniels said.  Those ideas, however, did not percolate during the 2010 election, which was dominated by Tea Party activists advocating fiscal restraint.

The election was “all diagnosis, no prescription,” Daniels said. Tackling Social Security and Medicare is “all work to be done.” 

Achieving solvency will occur only with significantly higher economic growth, according to Daniels. It also will require tax reform, but he cautioned against relying solely on increasing taxes for higher income levels, which could undermine the economy.

“I am for a tax system that generates more revenue,” Daniels said. “But we better be very mindful of how we go after it. We’ve shot ourselves in the foot before – and we could do it again.”

Most importantly, political leaders have to level with Americans about the challenge of fiscal rebalancing, Daniels said. It can’t be done simply by banning earmarks or eliminating waste, fraud and abuse, which “trivializes something much, much larger.”

Daniels is optimistic that the country will accept sacrifices needed to achieve solvency.

“I really believe…that our fellow citizens will have the courage to support the necessary actions if we have the courage to propose, advocate and explain them,” Daniels said. “I do believe we’re going to get to the point where the American people will say, ‘If that’s what it takes for my kids to grow up in a more prosperous country, let’s go.’”