>> this week on "q&a" our guest is indiana republican governor mitch daniels. >> governor daniels of indiana, what is the toughest part about your job? >> at the moment, it is worrying about folks who are out of work are vulnerable to that, with our states being hit suddenly hard. we are trying to make sure we are doing right by them while protecting taxpayers at the same

time. the difficulty of the job and its chores shifts from year to year, sometimes month to month. >> what was the best training for the job? >> the best training i had was trying to learn how to help other people do their best work in large numbers, manage or lead a complex organization to results, and keep an eye on every dollar. i would say by far that was the best preparation i had. >> you ran an ad i want to show in your campaign. i will ask you about it when we get back. >> whatever your outlook on news. this is the last time you have to watch me in an ad like this. the only office i would ever run for or ever will. i have no ambition other than the one we started with, to tackle indiana's problems head on and leave the world a better place for our children. we want to put a permanent limit

on property taxes, recruit new jobs, and make college affordable for all. rehire us, and we will. >> why did you say what you said in that ad about never running again for any other office? >> i try to do my own work, whether it is speeches, including the advertisements we ran. i wrote that probably 10 months before the election. i knew what the final summation would be. i suppose i said it because i wanted people to know we are not on the make for anything else. we sincerely wanted a chance to improve our state, and will give every bit of effort to that, and maybe to reassure people they would not have to deal with this anymore after the end. >> are you still of the same mind, no matter how often people are writing these days,

what are you thinking of getting into the 2012 election? >> i have painted myself in about as well as a person can. i say i have got lots of reasons for, i suppose both negative, but i want to concentrate on the positive reasons, and that has to do with doing what we said we would do. we have made a very determined effort going on six years now to tell people in our state about the big changes we wanted to make, all the things we would like to do. we are almost religious about trying to live up to those words.

i would like to complete eight years in that fashion. i hope the citizens of my state feel that a group of people came and went from public service who meant exactly what they said and agenda. >> so what are the negatives? >> i would not subject my family to what i see as the savagery of presidential politics. for me there is a lot about the way people campaign for president right now that i find superficial. i think principally that i have hired on for four years. i am duty bound to fill out those four years. it is a very fulfilling thing to work on, if you can see progress being made. so far, we have. >> when did you decide, and the last thing i read was that you went to 92 indiana counties three times. >> a minimum, yes. when i first ran, and i have not stopped traveling. i travel all the time.

we went to each of our counties. i remember we said we would cover them all in the first 100 days, and we did it in about 98. >> how did you do it? >> in an indiana-built rv. >> was it built in elkhart? >> yes, it was. it was an entry-level model. it was a rolling fraternity house, two young guys and me. i went to all those places where people said no one ever comes here. i stayed overnight in people's homes, which i still do. i stayed overnight in yorktown, indiana, just last week. it has been our m.o. i can name a whole list of issues or problems that i first heard about doing that, where we were later able to go do

something to solve or address. personalize it if you can. >> i remember the bar stool was sitting on in clay city, indiana, when a couple of single the state had done for years helping them enforce their rights through child- support. i went back and dug into it and found out that is right. only 50 cents on the dollar got collected on average. we have worked very hard on that. we are pushing 61 cents now. i remember a diner in muncie where i found out how many kids were waiting for treatment for autism, on a waiting list sometimes for years. it is still a problem, but we have done a lot about it. i remember the highway worker told me it is a joke, we do not have a third of the money we

need to build all the roads people have been promised. i was at a golf tournament not far from where you grew up, ai checked, and he was right. we went and did something about that. i recently saw a man i admire a lot, lamar alexander, former governor and now senator from tennessee. i told him early on in this adventure what i was doing. he said that is exactly what you should do. he said it will probably make you more successful candidate, but it will definitely make you a better governor, and he was right. >> let's quickly go through the different things you have done. monongahela, pa., what year did you come to indiana? >> my family arrived in indiana in 1959. i was about 10 years old. we had lived around the south. we never lived in pennsylvania. i was born in the same hospital room as joe montana.

we lived in tennessee and georgia, and moved to the indianapolis area when i was 10. i went to north central high school. at that time, i believe it was one of the handful of best high schools in north america. we were fortunate to go there. it showed me that you can have uncompromising excellence in public schools if you have the right elements. i went to princeton university, law school at night school. i finished at georgetown while working out here. >> what was the first thing you did in politics? >> the lowest person on the totem pole for a campaign for bill ruckleshouse for the senate in our home state. he went on to renown in the

nixon administration, and resigned in the saturday night massacre. >> you worked for him when he was the first head of the epa? >> no, just when he ran for office. i finished school and fell in with the boy-mayor of indianapolis, dick lugar, our distinguished senator. he was an idealistic and very active young mayor at a time when cities were at the forefront of american consciousness. he was making great transformations in my home town. i went to work for him a couple of summers, and he talked me into sticking around for a

little while, namely 13 years. >> you just turned 60. how old were you when you started working for him? >> 20. >> and then what? after you worked for him as mayor, what was next? >> he got elected to the senate. he asked me to come along, and i did. i spent the next eight years organizing his affairs here. >> working for him in the senate? >> that is right. >> what did you learn about this business what you were in the senate? >> how patient and how difficult one has to be in the legislative process. although i am incredibly grateful that great people like dick lugar, lamar alexander, serve in the congress, it will probably never be for me. the difficulty of making a major difference requires great skill and great patience, but i saw that it can be done.

>> what year did you leave senator lugar? >> in 1984. i was on my way home. by that time, we had three girls. we were very intent on raising them in indiana. stick around washington as long as i did, but senator lugar was very persuasive. i got a call from friends in the reagan white house and they asked me to go down there. the next three years were spent there. i was assigned to work with the federal system, the governors, mayors, and local officials. later on they added the political office, so i

supported the president in those ways. >> that came to an end in what year? >> 1987. then i went home and went into private life, where i thought i would stay the rest of my working days. i had a great experience for the next 15 years. >> doing what and for whom? >> i was ceo of a research organization called the hudson institute for a few years. i practiced law on the side. the legal profession was spared the embarrassment of my services for very long. one day the phone rang, and it was eli lilly and co. >> based in indianapolis? >> yes, and with one of the single biggest pieces of good fortune that came my way. i went to work over there for

11 years. >> back to politics in what year? >> the phone rang in december of 2000. it was an inquiry about coming to be part of the incoming bush administration, which i accepted. >> you mean the george bush administration? did they offer you a job as director of omb right there? >> not initially. the first call was about a different job, which i said thanks, but no thanks. i am productively occupied here, and you can get someone better for that. then they call back and i told my wife, now we have a problem. now they are calling about the one job they have that i would probably be interested in. that was omb. >> here is a piece of tape of

you testifying on september 6, 2001. it is not very long. >> the president is the biggest spender, hands down, in this town. the administration, with its tax cuts, is the biggest spender hands down. that is money that is being spent, going out of the treasury. when you are talking about big spenders, perhaps the administration ought to look into a mirror. what is going to be done here? we are facing a crisis. >> that was not much from you, back then. you were being called the blade at the time. if i remember, you were trying>> i still own that tie, by the way. i had it on the other day. i know what i hope i said, which was respectfully, when you

let themselves, that is not government spending. i would have taken exception to his characterization. there were a number of interesting encounters back in those days. i enjoy jousting with members of the legislative branch. >> but you got beat up pretty badly back then when you wanted to cut. you would go up there and testify and they were in your face. i remember watching. what was your reaction when you were going through that? >> i tried to take it in good humor. there was an element of stagecraft in what they do, particularly when the cameras are rolling. you discount a little bit for that. it was set at the time that i

was a little more combat of in answering back than some folks. i remember thinking at the time, by that time i was not a spring chicken or a kid anymore, and i did not intend to stick around washington. i certainly did not want to do anything that would be counterproductive for the administration. i felt little less constrained than some folks do. if they were talking rot, sometimes i told them so. i really argued back, because i did not particularly care, i was not expecting to be up their lobbying or asking favors from someone i might have ticked off. >> during george bush's presidency for eight years, the debt increased five trillion dollars.

he did not veto a bill until september 2006. in the end, he had less vetoes than anybody since franklin pierce. did you ever recommend a veto that he said no to, and why did he not use the veto to keep the spending down? >> i did not. i came close a time or to, but i felt that if a bill got all the way to the president that was a candidate for a veto, it meant that somehow we as a staff had failed. later on, i certainly saw some that i probably would have made such a recommendation about, but i think it was long term, a bad thing in multiple ways. it is interesting to know that president bush was attacked as a relentlessly for being somehow divisive, and yet he did not veto bills.

he was constantly trying to work with the congress. i bet you could ransack the c- span archives and you would not find a foot of tape in which he disparaged somebody personally or called someone a name. it is just one of those ironies, but i think in the rearview mirror, a tougher position on spending would have served him well, and later on the republican party. >> there's a point of controversy when lawrence lindsey was asked how much it would cost in iraq and he said $200 billion. everybody said that was baloney. you are in the middle of all that and defended him. how does it look from this point of view? >> i have a thick file to confirm what i actually said at the time. we at omb were asked to cost the first supplemental to pay for the iraq war.

it is very clear on the historical record what the assumptions were. we were not war fighters, we were estimators. how much would it cost to defeat the iraqi army and be out six months later? we gave a number that turned out to be very much on the mark. larry had a more macro idea. this would not be world war ii or vietnam. that was not the supposition at the time. >> we are up to $700 million at least. what is your opinion on that? >> i am not going to second- guess anybody decision, either at the outset or along the way.

i will say that it has had profound consequences. it is the single biggest reason why the last election was lost, just the fatigue of at all. it was turning around, but not in time to make it obvious. $700 billion is a lot of money. there are some things that people so easily forget. i was in many, many meetings after september 11, national security council, homeland security council. the only question was, where and when will the next attack be? there was no doubt in anyone's mind. no one there would have ever forecast or dared to forecast we go another eight years without an american life lost to terrorism. we all know the history that all

over the world, intelligence believed there were weapons of mass destruction inside iraq. people should be a little more charitable. try to put yourself in the place of the decision makers who had to make that difficult call. >> what they believe the omb job? >> june 6, 2003. i had been commuting to the job. we were not about to uproot the girls. i had missed most of high school for my youngest, and i had to decide whether to serve out the term. we were approaching the term in anyone else where people have to ask themselves, if i am going to go, i should go now. if you get any closer to the next election, you owe it to the

president to step out and not be breaking somebody new in in that year. so i decided to go home and asked for my honorable discharge. >> what did you do then? >> it was in sequence. i turned my attention, having made that decision, and i will not call them friends, i will say well meaning people back home who were after me to become a candidate for governor. so i made that decision after first deciding about coming home at all. >> a couple of days ago you gave the budget address. this is a clip from that on june 1. >> if you are a taxpayer, after legislators to put the general public interest first and say no to the special interests who demand money we just do not have right now. when some lobbyists or legislator promises were spending on some favorite cause or project, ask him, which of my taxes or you are proposing

to raise, and why do you want to do that? across america, people are asking how indiana has kept its head above water while everyone else is drowning. it is because we are hoosiers, of course. we have a quaint custom of not spending money we do not have. if we keep our common sense now, we will get through this very tough patch and come out ahead of other states. >> what is a hoosier? >> we debate that, you know. we debate the etymology of the word, and no one knows for sure. in my judgment, it is a person of basic decency and compassion and common sense. that is the way people tend to be. we know this, and we think you represent us pretty well. folks across america want to know what a hoosier is. i say look at lamb and you get a pretty good picture. in missouri, this is the parlance.

i learned that reading a biography of jesse james. it goes back somewhere, but to us it has a more positive connotation. >> i heard someone say that indiana is only one of three states with a surplus. >> they are not too many. we still have 10% of a year in reserve, only because we have been extraordinarily careful about spending all the way. revenues dropped 8% last year. we cannot take too many years like that and still have a savings account, but we do. >> you say in your message that you are going to decrease 2.5% but still increase education? >> that is our suggestion. i hope we can get the legislature to go along with it. elsewhere in that speech i put up maps that show how many

states, more than two-thirds, that have cut education, sometimes very drastically. we have not had to do that. i showed how many states have raised taxes. it is getting close to 40, and we have not had to do that. i have said to my fellow hoosiers, that in business, the strongest businesses tend to improve their position in tough times. weaker managers tend to fall back. if we are able to keep services up and taxes down while everyone else is going the other way, businesses will come to indiana and more often when they are ready to invest. 6.3 million is the current population. it is about 16th in the united states in size. >> in the legislature, the senate house made up of democrats and republicans -- what is the break? >> 6 and three democratic.

the senate is republican by a fairly significant margin. the house is democratic by two seats, so we have divided government. >> when you read about history of governors, everybody writes about two things. you know what they are. >> the toll road and daylight savings time. >> where did you get the idea to sell the toll road fort $3.50 billion, and what toll road is it? >> across the northern part of the state, the indiana toll road for 50 years. it is about 157 miles. it crosses indiana from border to border and connects to the chicago skyway. as i have often said, i did not get up one morning and say wouldn't it be fun to lease the toll road? i told you about the highway

worker who said it was a fraud. he was right. i stayed up a lot of nights thinking, how are we going to solve that problem? the president rightly tried to center his stimulus bill on infrastructure. i wish more of it had dealt with that, as opposed to what congress did. indiana got a three-year head start. we looked at more than 30 options for how you might find more money to invest in our future. i finally realized that we could do the other 29 and not have enough to really address our problem. i thought i would try what we did try. we had an option. our timing was good. we got an unbelievable bid, probably 30 times -- the toll road was losing money. many people are now writing that the successful bidders

overpaid. i wish them well. i hope they get their money back. indiana got almost four billion dollars, free and clear, not a dollar of taxes or borrowing. we are reinvesting all of it. it was absolutely the best thing we will probably ever do, no matter how many other reforms we pull off. i do not know what we can do that will touch this. the benefits will be there for generations. the payoff will also come in the jobs that locates indiana because of that infrastructure. someone asked me if it was a good deal. i said it was the best deal since manhattan for the beach, except this time the natives one. >> who leased it? >> an australian bank organized the financing, and a spanish

operating company -- there is nothing remotely new about this. some of the earliest roads in indiana were privately built toll roads. these people know what they are doing. they are putting billions into the road. this road had no electronic toll lane and probably would not have for another 10 or 20 years in political hands, but it got within the first few months of their operation. >> what is happening to the fees? >> it is a regulated utility. they cannot raise the tolls except under the terms of the contract, basically limited to inflation. >> do you think they got a good deal? >> you will have to ask them. the world financial press as indiana took them to the cleaners.