Stateline Story

Daniels Draws on Private Sector for 'New Crew'

The common touch helped Mitch Daniels, who hit Indiana's campaign trail in a plaid shirt and corduroys, overcome Democrats' well-funded efforts to paint him as a wealthy corporate and political insider.

But as the former White House budget director readies for his swearing in Jan. 10 as Indiana's first Republican governor in 16 years, he's drawing heavily on his past life.

So far his key appointees have been trusted corporate executives who will make up the "new crew" he promised while crisscrossing the state in a Hoosier-built vehicle dubbed "RV One."

To lead the transition and serve as chief of staff, Daniels has appointed Indianapolis attorney Harry Gonso, the star quarterback who led Indiana University gridders to their only Rose Bowl appearance in 1968.

Daniels also has named a former Eli Lilly and Co. executive to manage the state's budget, the former leader of a sporting goods chain to take charge of Indiana's troubled license branch system, and the co-founder of Vera Bradley Designs to help spearhead state economic development efforts.

"Government was not designed to be a business, but it can be a heckuva lot more businesslike," Daniels said in an interview. "I've got to find a way to go in there with a cadre of outstanding people to whom I can say, Take that dysfunctional agency over there and improve it, make it work better.'"

Daniels' win over incumbent Democratic Gov. Joe Kernan by nearly 200,000 votes almost appears preordained in retrospect. But Kernan, who took over the state's top office after the sudden death of Gov. Frank O'Bannon (D) in 2003, ran a spirited campaign. And Daniels, in his first run for office, had several strikes against him.

He had spent years working for a big drug company. He had just left a top federal job. And he was a multi-millionaire from Indianapolis, the city many Hoosiers love to hate.

To downplay that image, Daniels campaigned as "My Man Mitch," a nickname given him by his former boss, President George W. Bush.

He began and ended his campaign at Hinkle Fieldhouse, an Indianapolis arena featured in "Hoosiers," the 1986 hit movie about a state high school basketball Cinderella team.

Meanwhile, Kernan, a former South Bend, Ind. mayor more comfortable in blue jeans than a suit and tie, was saddled with building his own team to run state government. He also was distracted by cleaning up scandals that erupted under his predecessor, who had died less than 14 months before the election.

Kernan's duties kept him close to the Statehouse until Labor Day weekend 2004, when statewide races in Indiana typically intensify.

Daniels hit all 92 Indiana counties at least three times. Along the way, he handed out glossy "road maps" filled with proposals he claimed would help reverse the state's deep job losses, help close a nearly $800 million budget deficit and help establish a better ethical climate among government workers.

Together, Daniels and Kernan raised more than $30 million to pay for a nasty TV ad war. But retail politicking and strong support for President Bush's re-election among voters helped Daniels capture 53 percent of the vote.

Daniels spent much of his time on the road claiming the state was "broke." Democrats retorted that while he was budget director the United States went from a $236 billion surplus to a $375 billion deficit.

The only time Daniels' strategy was tested came when Kernan released a series of ads reminding voters Daniels had served on the board of an Indianapolis utility that had been sold to an out-of-state company, costing hundreds of Indiana workers their jobs.

A sudden drop in the parent company's stock also hurt retirees and shareholders, some of whom appeared in Kernan's ads to rebuke Daniels and question his integrity.

As Daniels struggled to respond, Kernan closed the gap. He and Daniels were neck-and-neck in statewide public opinion polls at times. But no independent survey showed Kernan leading during the campaign.

Later, a series of ads portraying Daniels as working to keep prescription drug prices high while he was an executive with Indianapolis-based pharmaceutical giant Eli Lilly and Co. seemed to backfire on Kernan.

The ads were meant to spotlight the $27 million Daniels reported making in 2001 after cashing in his Lilly stock, but they ended up hurting Kernan's image as a likeable guy.

In the campaign's aftermath, Daniels is relying on lessons learned defending Lilly against legal assaults and advising two U.S. presidents, Reagan and Bush.

"He's absolutely a whip-smart person," said Indiana University political science professor Bill Blomquist.

Blomquist said any weaknesses in Daniels' hiring strategy might not appear until he has been in office a year or so. By then, his appointees could grow frustrated with the slower pace of government operations and the greater demands they face for openness and public accountability.

"Cutting through the cultural inertia of state government will be Mitch's biggest problem," said Mark Lubbers, a friend of Daniels' and a campaign and transition advisor.

Daniels' election on a theme of turning Indiana in a new direction could turn out to be a watershed event. Hoosiers take fierce pride their ability to resist change, sometimes for the sake of doing so.

For instance, under pressure from rural constituents, state legislators have defeated several attempts to put the entire state on daylight-saving time - a move the governor-elect favors.

Already, Daniels is setting the stage for next year's General Assembly session by regularly calling attention to the state's dire budget situation.

In January, Republicans who regained control of the Indiana House this year and now dominate the General Assembly will face stark choices about where to trim the $11.7 billion-a-year general fund budget - and how much to increase taxes.

For now, they are pledging their fealty to the Daniels.

"He's going to drive the agenda," said State Sen. Luke Kenley, R-Noblesville, who chairs the chamber's tax-writing panel.

But Daniels' advisors say that if he's going to succeed, he'll have to poke and prod state lawmakers, even Republicans. And to keep pressure on them, he'll need to go over their heads, appealing directly to the voters who put him in office.

"It won't be easy," Lubbers said. "The selling job, the campaign, isn't over because on one day, at the point of sale, people felt like, OK, let's try it.'"

Kevin Corcoran is senior Statehouse reporter for The Indianapolis Star.