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Common Goals

Pages 36-39

By Dawson Bell

Mitch Daniels is the president of Purdue University and former two-term governor of Indiana (2005-13).  Educated at Princeton and Georgetown University Law School, he served on the staffs of former U.S. Sen. Richard Lugar (R-IN) and former Presidents Ronald Reagan and George W. Bush.  As governor, Daniels presided over significant budgetary and tax reforms while dealing with a sometimes hostile legislature, easily won reelection in the Democratic wave year of 2008 and developed a reputation for policy innovation.

A groundbreaking 75-year lease of the Indiana Toll Road in 2006 generated $3.85 billion that was used to reinvest in the state’s transportation infrastructure.  In 2011, he was considered one of the early favorites to win the Republican presidential nomination, but declined to run for personal reasons.  In advance of his appearance at this year’s Mackinac Policy Conference, Daniels spoke with the Detroiter about his distinguished career in the public and private sector, and how the government can work toward common goals.

During your tenure as governor you developed a reputation for getting things done, usually without the full-throated support of the other party.  How did you manage that?

Mitch Daniels:  We had half our time with a split legislature, half our time with a supportive legislature. We made things happen in both contexts, but it’s obviously harder.  You have to work around it.  Whenever possible, we looked to share the credit.  We took the position that only results matter.  I told our folks, don’t worry about duking it out with talking points.  If we have to settle for 80 percent of what we think is the right answer, that’s better than zero.  In the end, what we should care about and what others will finally judge us by are results.

Could that be replicated in Washington, perhaps if you had chosen to run for president in 2012 and won?

MD:  I don’t know that it could be.  Obviously Washington is a troubled place right now.  There’s no magic elixir.  There’s no way of knowing what would have happened.  We would have been tackling frankly a much harder problem than anything they’re dealing with now, and that is the unconscionable debt and fiscal position into which this nation has wandered.

If they’re having trouble solving relatively manageable issues like, I don’t know, immigration, I have no way of necessarily believing we could have brought people together around the kind of changes that will be necessary, so that we don’t impoverish our children.  But we’ll never know now.

One of your signature achievements as governor of Indiana was the multibillion-dollar lease of the state thruway, allowing the state to invest heavily in the reconstruction of the rest of the highway and bridge system.  Explain how that came about.

MD:  When I took office, I came to see quickly that Indiana had not one, but two deficits.  In that respect, we looked like a lot of states.  By two, I mean we had an operational deficit.  We had a budget that had outspent its income six or seven years in a row, and therefore owed a lot of money to schools, cities and towns.  So, that was the first thing we worked on.

But (at the end of my first legislative session) a reporter asked:  “What’s next?” I said: “It has to be infrastructure … because we have a big capital shortfall, too.”  It was one of the most remarkable business deals of all time, probably cannot be replicated. Part of it had to do with very fortunate timing.

We scored an astonishing amount of money.  The other thing … we laid down an absolute inviolate principle that any proceeds … could only be invested in capital or long-term projects.  Not one dime could be used for current expenses.  What we’re doing here is trying to liberate trapped value from an underperforming public asset and rotate the money to something that brings a higher return.  We thought that addressing Indiana’s infrastructure shortfall was a really important thing to do for the long-term prosperity of the state.

The deal happened in 2006 and for ten years Indiana broke the all-time highway construction record.  A host of giant projects that had been on the drawing board for decades happened or are in the process of being finished now.  It was a marvelous achievement overall.

We hit the mother lode in terms of the high bid.  We were successful in protecting all the money for long-term investment … including paying off 50-year-old bonds for the toll road.  We also hit a long stretch where we were building like crazy and a lot of states couldn’t build anything … we were stretching the dollars.  The competition was really ferocious.  We were routinely getting a 25 to 30 percent under estimate.

You mentioned you weren’t sure your Indiana experience could be replicated.  Why is that?

MD:  At the time we did it, markets were just right. The firms … both financial and operating, that were interested in public private partnerships believed.  We all believed that that whole market was about to break loose in the U.S., so they were really eager to establish a position with this very large project.  The big surprise for me was that it wasn’t quickly superseded by bigger projects elsewhere.  Then the markets turned; that made it less attractive.  I think it is still a smart thing to do, but I don’t think anybody is ever going to get a blowout bid like we did.

What about a state like Michigan, which for all intents and purposes doesn’t have any toll roads to lease?

MD:  Well, the opportunity would be to involve private capital alongside or even in place of public funds.  Still the smart thing to do.  We built a couple of bridges that way.  We even have an entirely private bridge in northwest Indiana going up.  There are all sorts of alternatives to traditional public bidding.

You went from one executive office to another, assuming the presidency of Purdue in 2013.  Talk about the role of higher education and Purdue in shaping the future, especially the school’s place in essential fields like science, technology, engineering and math (STEM).

MD:  We’re investing very heavily in what is already a STEM-centered university.  We think that’s possibly our single greatest contribution we can make.  We aspire to be the best such university between the coasts.  I don’t necessarily preach that to anybody else, but we think it fits our state and our mission.  National commissions say we need 10,000 more engineers a year.  We at Purdue intend to deliver 6 to 7 percent of them all ourselves.

You’ve talked a lot about containing costs and increasing accountability in higher education. How are you accomplishing that at Purdue?

MD:  We’re out to produce the best value that we possibly can here.  So, part of that has to do with the quality of the learning and the research that happens, and the other part has to do with the cost at which it is delivered.  We have frozen tuition for two years … and I plan to ask the board for at least a third year.  And we’ll just find ways for the university to live within those means, and I think we can.

How has that been received?

MD:  Quite understandably, students and family seem to appreciate it.  But I think really across our campus, staff and others are proud that we are trying to do something to make sure that the place remains open to any student who can meet our standards.  We hope to see students leave here either with no debt or debt they can easily manage.  I would also say that our alumni seem to be very receptive to it.  I think everyone is concerned about the cost of college getting out of people’s reach.

What is your view on the importance of charter schools and school choice in improving education?

MD:  First of all, no two students are alike, so a range of choice is a good idea.  Secondly, competition makes everybody better, and we’ve seen that.

In Indiana, we made sure students could choose any public school.  Then, we expanded charters.  Finally, we included non-government schools throughout the nation’s largest universal voucher plan.  We have a maximum of choice here.

I see it as a social justice issue.  There’s no reason only wealthy people should be able to … pick the school they like, while less wealthy people are trapped in a school that public authorities tell them to send their kid to.  There had been a pattern (from the public school establishment) of trying to strangle this movement, and we reversed that.

Any thoughts on Michigan Gov. Rick Snyder?

MD:  I like him a lot.  It seems to me he’s done a lot of the right things, and I’ve enjoyed reading about them.

How about the presidential candidates for 2016?  Do you have a favorite?

MD:  I eventually will, but I won’t be talking about it openly.  I took an oath of non-partisanship on the day I took this job.

Dawson Bell is a metro Detroit freelance writer.