Debt Politics

In the wake of the 2024 election, former Indiana Governor Mitch Daniels joins James Patterson to talk about the one issue politicians all try to avoid: the national debt. Though we have an impending debt disaster, both sides of the aisle avoid the hard choices that will eventually need to be made. Today, Daniels worries, it may be too late for a soft landing. We chose not to find solutions, and we’ll start living with consequences very soon. Daniels and Patterson also touch on the state of higher education, the election, and our evolving partisan dynamics. 

Liberty Fund is a private, non-partisan, educational foundation. The views expressed in its podcasts are the individual’s own and do not necessarily reflect the views of Liberty Fund.

Related Links:

• Mitch Daniels, “The Day the Dollar Died,” Washington Post
• Mitch Daniels, “I’m Talking to You,” Law & Liberty (2022 Purdue University Commencement Remarks)
• The Future of Liberty, hosted by Mitch Daniels
• Vance Ginn and Thomas Savidge, “Two Rules to Tackle America’s Debt,” Law & Liberty
• Samuel Gregg, “David Hume and America’s Debt Disaster,” Law & Liberty

Transcript

James Patterson:

Welcome to the Law & Liberty Podcast. I’m your host, James Patterson. Law & Liberty is an online magazine featuring serious commentary on law, policy, books, and culture, and formed by a commitment to a society of free and responsible people living under the rule of law. Law & Liberty in this podcast are published by Liberty Fund.

Hello and welcome to the Law & Liberty Podcast. I’m James Patterson. Today is November 8, 2024. Today, our guest is Governor Mitch Daniels. Mitch Daniels served as a two-term governor of the state of Indiana from 2004 to 2012, and as the 12th President of Purdue University from 2013 to 2022. He currently serves as a distinguished scholar and senior advisor at Liberty Fund. He was elected governor in his first bid for any elected office and then reelected with more votes than any candidate in the state’s history. At Purdue, Daniels prioritized student affordability and reinvestment in the university’s strengths.

He ended 36 straight years of rising prices by freezing tuition and mandatory fees at 2012 levels for all students. The freeze is still in place today. As a result, the total cost of attendance is lower today than in 2012, even without adjusting for inflation and aggregate, student borrowing has declined by 37 percent. Prior to becoming Governor, Daniels served as Chief of Staff to Senator Richard Lugar, Senior Advisor to President Ronald Reagan, and Director of the Office of Management and Budget under President George W. Bush. He also was the CEO of the Hudson Institute and had an 11-year career as an executive at Eli Lilly and Company. Daniels earned a bachelor’s degree from Princeton’s Woodrow Wilson School of Public and International Affairs, and a law degree from Georgetown. He’s the author of three books and a contributing columnist to The Washington Post. He and his wife Cheri have four daughters and eight grandchildren. Congratulations. I should mention that he is also the host of the podcast, the Future of Liberty, here on Liberty Fund. My goodness, Governor Daniels, welcome to the Law & Liberty Podcast.

Mitch Daniels:

After that long and dreary recitation, James, I hope we have some listeners left. If they’ve all fled, I would understand but thank you. It’s very gracious of you.

James Patterson:

I just read what they sent me, Mitch. … No, sorry, Governor Daniels. As a Native Texan, I get a little informal. So let’s get started. We just had an election, but I wanted to frame the election around something that I know is important to you and should be more important to the people of this country. Last September, you wrote an op-ed for The Washington Post titled, “The Day the Dollar Died is Coming. What’s the plan?” I thought we might open with you talking about the argument you present there and whether the results of the recent presidential election might have changed your views.

Mitch Daniels:

I haven’t changed my views because my views are based on arithmetic. And it’s pretty inexorable and certain. No, I mean, I thought a sadness of the most recent election was that what I consider the biggest threat facing the country, and I’m not alone in that, never got mentioned by either candidate and when it did … I’m talking about our national debts we’ve accumulated and are accumulating, and when it came up even tangentially, it only served as a platform for the two candidates to promise to make it worse. That is not to touch the so-called entitlement programs and things that will have to be touched eventually if we’re to avoid national ruin. So I understand why practicing politicians run away from this question, but as a nation, we won’t be able to do that much longer.

James Patterson:

Actually, that leads to my next question. Why do you think issues like the debt and budget deficits don’t play a bigger role in our politics despite the fact that we have a pretty proximate disaster running here? Is it that it’s just easy to kick the can or maybe they don’t even know?

Mitch Daniels:

It is too easy. It’s too easy to demagogue the issue. We’ve not found, or no national politician has found a vocabulary or chosen to use one that tries to explain to people that, for instance … people who are worried about this and want to act on it aren’t out to undercut the safety net and those who rely on it, we want to save it and save it from devouring itself, for instance. And so each person, it’s not that a few people haven’t tried to get Americans to think a little more about the future, a little less about the present, more about their children, a little less about themselves. It’s just that each time somebody stuck their head up tried to do that, it’s been a political cheap shot to take it off. And that doesn’t speak well of our maturity as a self-governing people. But you know this old saw that we won’t act on problems until there’s a crisis, I suppose is playing out again.

Before I wrote the piece you just mentioned, I’ve written a bunch and spouted off on this for many, many years. And during those years, I’ll say the last 15 or so, we’ve unfortunately I think moved past the point where we can deal with this without some pretty wrenching changes. We had that opportunity. If we’d gotten started back for instance, when the Simpson-Bowles Commission reported before President Obama walked away from it and torpedoed it. If we’d gotten started then there’d have been some difficulty as we tried to keep the promises we’ve made and social security and Medicare and other programs, but we could have moderated that. We certainly could have protected the most vulnerable people better than we’re going to be able to now. So just to compound this problem, James, something else has happened in those 15 years that … and I really don’t have an answer for this, and that is that our national defenses have atrophied.

While our adversaries have gained strength, and aggressiveness and appear to be allying with each other. And so we face a twin dilemma, it seems to me right now. If you consider as I do, the two fundamental duties of government, the reasons government comes into being in the first place, first to protect the safety and order of those to whom it’s responsible. And secondly, to dispense of collective resources. Those we confiscate from free people for what we believe to be important common purposes. We’re defaulting on both of those and now we have huge repair work to do on both fronts. And those two fronts are inconsistent with each other. So not trying to ruin everybody’s morning or whatever time the day they’re listening to this, but I think we have to face these challenges very squarely. And I hope despite the campaign that we just saw that the next administration and the next Congress will do so.

James Patterson:

How did we end up in this mess? It’s very unusual for nations historically to go into such debt during peacetime. I mean, certainly during some of this period in the post-war years we were at war, but not all the time and not necessarily at costs that would necessarily entail the size of the debt we have now.

Mitch Daniels:

Good question. It’s a reflection, I guess of the advance, if you call it that, of civilization. No country I can … no nation, I can think of that has reached the point we have reached. This year, we reached a more than symbolic threshold as interest payments on the debt surpassed our investment in national defense. And no nation that has gotten to that point before has come out of it well—in fact has really survived as an important world power. But those throughout history that have passed that point generally got there because of wars. England, fighting France and Habsburg Spain, and so forth. And we got there with the—I’m willing to credit—the best of intentions, trying to make certain that people were not destitute in their old age, things like that, but without the will, as it turned out, to fund those programs adequately. So now people are going to h