Revisiting Mitch Daniels' "Truce" on Social Issues

Those who would trade cultural priorities for economic prosperity end up with neither

There’s a myth in Indianapolis Republican circles that goes something like this: back in the good old days, the Indiana GOP was made up of high minded, moderate statesmen from metro Indianapolis like Richard Lugar and Bill Hudnut. Then a bunch of troglodytes from rural Indiana like Mike Pence took over and wrecked the party and the state with extreme social conservative policies that are bad for business.

Reality is very different. Since Republicans retook power in the state in 2005, Indiana has largely been run by Republicans from metro Indianapolis who have operated according to a philosophy Mitch Daniels called “the truce,” or the avoidance of social issues in favor of fiscal and economic development matters.

In terms of actual legislation enacted, Indiana is actually one of the least socially conservative red states. But the economic results have been underwhelming to poor for the state and its people. The Indianapolis GOP elites and their truce both effectively disenfranchised and impoverished the state’s Republican voters, while the left, which never agreed to any part of a truce, made significant advances on its own social policy agenda in the state.

From the standpoint of the average Republican voter, the truce was a thus a double failure. There’s no reason to believe abandoning cultural issues in favor of economics will work anywhere.

The Indiana GOP’s Record on Social Conservatism

Daniels’ truce idea got big press back in 2010 and 2011 as he was exploring a bid for President. Though I don’t recall him using the term with regards to how he governed Indiana, this is basically how he operated for eight years. We see this in his own top 100 accomplishments list that’s still on the state web site. Not one of them is a social conservative item. I’ve never once heard him speak of a social conservative policy with regards to his tenure as governor since leaving office. A new Indianapolis Monthly article on the state’s GOP candidly says that the social conservatives were “boxed out” during his eight year tenure.

There were a few social conservative moves during the Daniels admin, but they were pretty small ball, and temporary as well. The state denied, then reversed the denial of a special license plate for a gay organization in Indy. (The state has numerous special fundraising plates like this). The state also tried to defund Planned Parenthood, a law that was overturned in federal court.

Most notably, at that time 29 states were passing constitutional amendments prohibiting gay marriage. Daniels and the GOP killed one in Indiana procedurally in a state senate committee. Indiana, one of the reddest states in the country, thus was among a minority of states that never passed a constitutional gay marriage ban.

Mike Pence looms large in the myth, but was only in office for four of the 17+ consecutive years the state the GOP has controlled the governors office. Pence is known almost entirely for the controversy over the Religious Freedom Restoration Act (RFRA). This legislation unexpectedly caught the ire of corporations, who threatened to boycott the state if it wasn’t repealed. Indiana quickly capitulated. There was nothing special about this law. It was based on a federal law of the same name signed by Bill Clinton. Many states have RFRA laws on the books today, including Texas. Indiana’s number just came up. Pence also signed some anti-abortion legislation that was overturned in the courts, with the exception of rules requiring the burial or cremation of post-abortion remains.

When Pence became Vice President, former Daniels campaign manager Eric Holcomb became governor. Holcomb has not only reverted to the Daniels approach of avoiding social conservative issues when he can, he actively signals to the left on social issues, such as by announcing the creation of a state diversity, equity, and inclusion office, doing photo ops with refugees, and recently vetoing a ban on transgender athletes in girls sports in the state’s schools (even though it will almost certainly be overridden). He was one of only two GOP governors to veto such a bill.

With the exception of abortion, where there have been some laws passed and regulatory squeezes applied to the industry, there’s been much more noise than reality when it comes to social or cultural conservatism in Indiana. Plenty of socially conservative bills, or anti-urban bills, or various other proposals that give the left apoplexy get introduced in the legislature every year. Many of them are frankly wacky. They cause a firestorm in the local press. It may be the case that business and other lobbies have to invest large amounts of time and political capital stopping these, but almost none of them ever gets enacted. For example, for multiple years running, conservative state senators have introduced bills to try to cancel public transit expansions in Indianapolis. These are dumb bills to be sure, but they were successfully killed.

In the supposedly troglodyte, hyper-conservative run Indiana:

• Every one of the few substantive social conservative policies I’m aware of that actually passed in the last 17 years up until this year was ultimately rolled back (albeit a couple of abortion ones by federal courts).

• The state GOP procedurally killed a gay marriage amendment. Indiana was one of only three red states not to pass a constitutional gay marriage ban.

• It was the first red state to reject a law that would have banned teaching Critical Race Theory in public schools. The Indy Star just ran an article doing victory dance about this.

• It is one of only two states where GOP governors vetoed legislation that would have banned transgender athletes in girls sports.

• The state under Republican leadership has even itself advanced liberal social priorities like creating a state DEI office and passing a hate crimes bill.

In some respects, Indiana is actually one of the least socially conservative red states in terms of laws actually enacted. Culturally, the state probably skews more to a folk libertarianism than hard core social conservatism, but it’s certainly more conservative than its laws would suggest.

Who Runs the Indiana GOP?

It’s important to also note that again, contrary to popular belief, it is actually people from metro Indianapolis who’ve been running the state. Mitch Daniels, Eric Holcomb, state speaker of the house Todd Huston, his predecessor Brian Bosma, state GOP chair Kyle Hupfer — all from metro Indy. (The state senate president pro-tempore is also from metro Indy, though from a part more culturally aligned with the rest of the state).

As Indianapolis Monthly observed, “The moderate wing of the party was and is a creature of greater Indianapolis.” And, “To say Daniels remade Indiana’s Republican politics in his own image would be an understatement.”

Mike Pence, the one exception to metro Indianapolis rule, was in power for less than a quarter of the latest Republican streak. Anytime he or anyone else attempted or attempts to do anything contrary to the Indianapolis agenda, they are subjected to vicious attacks. Former Daniels campaign manager Bill Osterle openly tried to recruit someone to primary Pence for re-election (and flirted with running for governor himself). Other Indianapolis area GOP leaders openly poured scorn on Pence. When conservative state treasurer Richard Mourdock primaried and defeated long time Senator Richard Lugar, big tracts of establishment GOP people voted Democrat to ensure he couldn’t win in the general election. (Rank and file conservative voters are ironically much more loyal to the party than the elite, and will vote for Libertarian protest candidates, but rarely for a Democrat. Many Christian leaders openly teach that it is actually a sin to vote for a Democrat. But the leaders have no such loyalty, something I observed first hand at the Manhattan Institute in 2016, where more of the staff probably voted for Hillary than Trump).

Undoubtedly there are socially conservative factions within the Indiana GOP, particularly in the state legislature. They do have to be reckoned with and sometimes placated. But they have not been the ruling faction for vast majority of the last 17 years. And their influence has more been felt in areas like limiting local control in municipalities than in cultural priorities.

While the Republican governance agenda is far from reflecting the totality of the preferences of the Indianapolis leadership class as a whole, it is Indianapolis area “moderate” Republicans who have disproportionately steered the state. A central organizing principle of their approach since Mitch Daniels was elected has de facto been the suppression of the cultural aspirations and preferences of the average Republican voter in the state.

What Were the Results of the Truce?

I was actually a big Daniels supporter, and with the exception of a couple of policy points agreed with almost everything he did. I remain a great admirer of his. The idea of the truce, of trading social priorities for fiscal discipline and economic growth sounded reasonable on paper. But did it work?

Fiscally, it did. Indiana went from a budget deficit to a massive surplus and a AAA credit rating. It is one of the nation’s fiscally strongest states.

Economically, it was a complete failure. While the state has added population and jobs slightly faster than some other surrounding Rust Belt states, it has been a demographic and economic laggard. Much of the state is shrinking. Job growth has trailed the nation. Personal incomes fell from an already low level relative to the nation, making Hoosiers poorer. Wage growth has been nearly the lowest in the nation. Talent was not attracted to the state. In fact, during the 2010s Indiana suffered its worst decade in history for college degree attainment in terms of its performance vs. the nation. The share of high school grads going to college is in decline. Indiana has become a haven for low wage employers. It is adding mostly jobs for workers with less than a high school diploma in a nation where most job growth has been among the college educated. Many of the state’s communities continued to physically decay. And social pathologies like opioid addiction exploded.

There have been bright spots. The tech industry in Indianapolis has grown significantly. Life sciences manufacturing is one higher wage area where Indiana has gotten a number of wins. Yet even the CEO of Indy’s biggest private sector employer, Eli Lilly, says the state’s educational levels aren’t up to par, and his company has been investing elsewhere.

Indiana’s conservative voters traded away their social priorities, and in return simply put further behind economically and socially. Again, for them the truce was a double failure.

I don’t claim the truce caused bad economic results, or even that Republican leadership is the primary source. I think structural forces beyond the control of the state’s leaders were more decisive. But the truce certainly didn’t make a positive contribution to the economy.

Social Policy Does Not Determine Economic Growth or Talent Attraction

Indiana holds important lessons for both conservatives and liberals. For conservatives, it shows that the low taxes/low regulation/libertarianish economic policy approach does not always create growth and prosperity.

For both liberals and conservatives, it shows that social policy has far less impact on talent attraction and economic growth than they commonly believe.

When California passed Prop 8 banning gay marriage, was there a mass exodus of people and business out of the state on that account? Not that I saw. In fact, the exodus of people and business has been picking up more recently, as California has become a more solidly progressive environment.

How much credit did Indiana get, and how much high wage investment did it attract as a result of killing a marriage amendment? None that I saw. Though people still talk endlessly about RFRA even years afterward, the fact that Indiana killed off its marriage amendment is already forgotten. California passed a constitutional amendment to ban gay marriage. Indiana did not. Think about that.

Or look at Texas, which did pass a constitutional amendment banning gay marriage, passed a RFRA law, and which just passed a very strong anti-abortion bill. None of that seems to have even dented their growth. Facebook even announced a major office expansion in Austin after the abortion law passed. Texas shows that states can grow while remaining very conservative, while at the same time having cities within them that have their own independent brand and are viewed as progressive. What the state did actually did not harm Texas’ cities. The Texas-Austin, and Indiana-Indianapolis parallels should be explored in more depth.

This is not to say that Indiana should go hog wild on social conservative policies or that doing so wouldn’t have consequences. Unlike Texas and Florida, which are large, growing states corporations can’t ignore, Indiana is a small, stagnant, and weak state that very much can be bullied. A company like Disney, with massive fixed capital investments in Florida, can’t walk away from that state. Conversely, Indianapolis has built its downtown economy around hosting sporting events, and these are extremely mobile. In fact, loss of events has been one of the few things that has happened to cities and states that angered major corporations. Indiana, home to the NCAA, is particularly exposed here. This doesn’t just affect Indy either, as Hoosiers love their sports, and many families come to Indianapolis from around the state to take in those events.

But the theories that have animated the GOP governance in the state for the last 17+ years are wrong. We tried them and they didn’t work.

The next time somebody in your state or a Republican in Congress says that suppressing social conservative policies is necessary to ensure economic growth or talent attraction, point them at Indiana and Texas. In light of their results, there is no reason for GOP voters to ever preemptively give up on their cultural policy preferences.

The Coming Rupture

Unfortunately, the lesson Indiana’s GOP establishment seems to be taking away from this is that they should double down on their existing approach. Again, in their mythos, it’s rural hilljacks who’ve been controlling everything and pushing bad policy. So their response is to try to suppress them even further and do more virtue signaling around DEI, green energy, etc. Look for another attempt to preempt local zoning control over wind and solar projects, for example.

But the natives are getting restless. Opportunistic politicians see the chance to run as hard Trump-style populists. State attorney general Todd Rokita, a potential 2024 gubernatorial candidate, has taken this approach. There were twenty three primary challenges against state legislators this year, mostly by more populist conservatives animated by social policy concerns.

As with Donald Trump, it seems possible that this will eventually bear fruit. Indeed, we already saw this year the legislature pass multiple socially conservative bills, including constitutional carry (allowing people to carry a concealed weapon without a permit) and the girls sports bill. Indiana’s governor is constitutionally weak, and his vetoes can be overridden with a simple majority vote. So Holcomb’s ability to block social conservative legislation is limited. Should Roe vs. Wade really be overturned, Indiana would almost certainly pass some sort of strong anti-abortion bill very quickly.

Those who oppose this should take a look in the mirror and acknowledge their own role in making it happen. Just as Trump could never have become the Republican nominee without the failures of the Bush administration, the way for Indiana’s populist insurgency (to the extent that one exists) has been paved by the double failure of the truce.

Daniels’ would be disciples should study the master’s playbook more closely. Daniels’ truce succeeded for him politically because he always made sure to culturally affirm the state’s people, even if he didn’t give them everything they wanted. He campaigned in an RV. When he traveled around the state, he often went by motorcycle, ate pork tenderloin sandwiches, and stayed in people’s homes instead of hotels. He had a folksy demeanor and never looked down on the people. (He was also able to provide them with the fiscal austerity and tax reform they wanted, a play that is now exhausted and can’t reap political dividends for today’s leaders).

Today’s metro establishment, as exemplified by Eric Holcomb, loves to poke Hoosier voters in the eye at every opportunity. He loves to do photo ops with refugees, but when he does something for conservatives like sign a constitutional carry law, he does it quietly. Others increasingly sound like Bill Kristol, George Will, or David French at the national level, using their media access to denigrate the values of average Hoosiers in the press. Daniels would never have made these kinds of unforced errors.

Establishment Republicans should have been aggressively catering to conservative cultural preferences as much as possible. There are a lot of these that would be bad to do, even if they are popular. But there are many others that would be perfectly fine. They should have been passing laws for every cultural item not significantly conflicting with the business agenda. I’m not a gun guy myself - in fact, I just shot a rifle and pistol for the very first time ever last week - but constitutional carry should have happened a long time ago. Holcomb should do a “victory tour” of the state shooting guns with people or something to celebrate it. They should have been closer to the Florida approach to handling the pandemic. Ron DeSantis reaped huge gains for his state there.

Much of the “woke” agenda is extremely unpopular with the public, even in blue states. Look at what happened in Virginia for example, where Republican Glenn Youngkin won the governors race in what is now a blue state by tapping into discontent with the public schools. The Holcombites could probably learn a lot by looking at Youngkin.

In a democracy, you have to give your voters something of what they want, or somebody else will come along promising to do so. The Indianapolis GOP establishment should have had a positive, prudential cultural agenda that resonated with average Hoosier voters in order to keep them on board with the program. But instead their position has been that the actual Republican voters of the state should be given nothing of their cultural preferences.

Maybe they can fend off the Trumpists. I’ve said myself that populist discontent in Indiana still largely manifests itself in folk libertarian Tea Party register. But if not, they will have no one but themselves to blame for what happens next.