The mild-mannered radical
Former Indiana Gov. Mitch Daniels offers insane, practical ideas on college debt, entitlements and social justice. He sat down to talk with Reason magazine’s KATHERINE MANGU-WARD
At first, Mitch Daniels seems bland. His hair is straight and tidy. His suits are understated but tasteful. He speaks slowly and in quiet tones. He gently declines to answer questions about the failings of other politicians.
But his record as governor of Indiana could best be described as radical. During his governorship, which ran from 2005 to 2013, he decertified all government employee unions on his first day in office, defeated teachers unions in a pitched battle for school choice, imposed tough spending austerity and raised taxes to balance the books, and inspired the Democrats in Indiana’s legislature to walk out at the beginning of his second term over a right-to-work bill. In his previous gig as the head of George H.W. Bush’s Office of Management and Budget, his nickname was “The Blade.”
In his regular Washington Post column, Mr. Daniels seems to delight in goading his readers. He has advocated relocating all the major federal agencies away from Washington, defended the morality of genetically modified foods and, most recently, called for the abolition of the “tasteless, classless spectacle” of the State of the Union address.
He also rides a motorcycle and was indicted for marijuana possession as an undergrad at Princeton.
In 2010, Mr. Daniels told the Weekly Standard that the next president “would have to call a truce on the so-called social issues” in the face of a mounting fiscal crisis. Between the kerfuffle caused by those remarks and his desire for privacy about an unorthodox relationship history — he and his wife married each other twice, with a break in between — he ended up stepping back from politics.
Since 2013, Mr. Daniels has been running Purdue University. If you talk to one of the people on his team, they refer to him as “President Daniels.” On the phone, it’s all too easy to imagine he’s calling from an alternate dimension where he actually ran for president of the United States — as many of his associates and the national media believed he would in 2012 — and won.
In a wide-ranging conversation, Mr. Daniels spoke with Reason magazine’s Katherine ManguWard about education and other topics.
Reason: These days, our national politics can sometimes feel like it’s oriented around student
debt and educational availability. You’re trying some unusual solutions to these problems as president of Purdue University, including not raising tuition over the past seven years.
Mr. Daniels: The tuition freeze began as a one-year time out, a gesture to indicate sensitivity to what was plainly a growing burden. (People) want to know what kind of voodoo we practiced and I say: Here, let me allay all your suspicions. We didn’t cheapen the faculty. We had one of the highest ratios in the country of tenure-track faculty. We didn’t downshift to so-called contingent or temporary or part-time teaching. We didn’t get any more money from the state. In fact, slightly less. We didn’t dip into the reserves—they’ve been growing every year. We didn’t resort to a sleight of hand through other fees in lieu of tuition. There haven’t been any of those either.
So the way I usually frame it is that, if a place like ours can do those things and run in the black on an operating annual basis while investing, while maintaining quality, why would you raise tuition? It ought to be the last resort, not the first instinct.
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Q: Income-share agreements have been somewhat controversial but also now seem to be potentially a Silicon Valley darling. These are arrangements where students sign a contract and some or all of their education is paid for. Then when they get a job, they hand over an agreed-upon percentage of their income for a fixed period of years. Purdue has been experimenting with them.
A. [Speaking to Congress, I said] if there were less ambiguity around some of the tax laws, I thought, this idea might finally take wing. I was astonished by the amount of press interest in it. I got engulfed as soon as the hearing was over, over this throwaway line.
I immediately began hearing from what turns out to be an incipient industry out there of people who like this, who want to see this idea get airborne. And I discovered that there were people hoping to operate businesses to administer these things and funds to invest in ISA contracts. So away we went.
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Q: There’s a real generational divide, right? You have people from a generation older than mine saying, “I worked my way through school. Why can’t the kids these days do it?” And the kids these days are saying, “I don’t think you understand the numbers we’re talking about here.”
A: That’s right. Working in the cafeteria helps, and we want kids to do that too. But you’re right, it can’t cover it all anymore. Financially, you can’t beat the heavily subsidized government loans, but you can definitely beat the loans that so many young people have to take on top of that. And there’s a further thing out there, which is what happens if we can get this thing to scale. We need lots more schools doing it. We need the number of — never say borrowers, by the way — the number of contracts to get bigger. But a fascinating thing to me is that at some stage, the market will begin to set the rate.
What percentage and for how long should an electrical engineer be expected to pay versus a sociology major? All we had to go on was history. We looked at what those categories typically were earning two years, five years, 10 years out of school, and we were able to build a matrix. But if this ever got to real size, the rates would be a signaling device. The students would look and see that the market believes that this degree or that degree is this much more valuable than some other. [But it] requires more funds getting going and more markets, more repayment experience.
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Q: As governor of Indiana, you implemented a universal K–12 school voucher program. Are there lessons for other states that want to do the same thing?
A: The starting point for me has always been that [the debate over school choice] needs to be defined by a term which has been, I think, improperly appropriated by others: This is a social justice issue. Social justice, first of all, cannot be allowed to [only] mean taking money from A and handing it to B.
So whatever social justice is, enabling poor people to have the same choice about one of the most fundamental of life’s decisions — the education of their child — qualifies, and so I always talked about it that way.
I think there’s very good evidence that competition improves education both in the voucher schools and in the surrounding public schools. And we’ve seen it here. But I think you start the argument with simple fairness and equity for those less fortunate, and that gets you a certain distance.
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Q: In that same period, you also got through some reforms to labor regulation and health care entitlements. The teachers unions were the strongest opponents?
A: Yes, they were. We became the first Northern state since the Taft-Hartley Act to pass right-to-work legislation. That would not have been possible, I don’t think, 15 or 20 years ago. The industrial and other unions were much larger and better-funded and stronger then. We passed civil service reform. On my first day on the job, after a lot of thought, I almost backed away from doing this. I struck down the executive order that authorized collective bargaining inside Indiana state government. And I was very afraid that it would cause an explosion and derail so many other things, a huge agenda of things that we’d come to office to do. That did not happen.