In a new Gallup Poll asking who is the national leader of the Republican Party, Indiana Gov. Mitch Daniels didn’t even rate an asterisk. That’s unsurprising. The governor of the country’s 16th most populous state won’t normally garner much national attention, especially when he’s an unassuming, old-school budget cutter.

It’s also a shame, because more than any other Republican officeholder, Daniels points the way ahead for his bedraggled party. He’s a Reaganite who’s not trapped in 1980s nostalgia; he’s a fiscal conservative who believes not just in limiting government, but in reforming it to address people’s everyday concerns; he’s a politician of principle who refuses to sell his program in off-puttingly partisan or ideological terms.

As they grapple with President Barack Obama, Republicans at the national level could do worse than ask themselves: What would Daniels do?

At a recent forum in Washington sponsored by the Bradley Foundation and Hudson Institute, Daniels noted that Ralph Waldo Emerson said every polity tends to have a party of memory and a party of hope. “Hope” has of late become a kind of swearword for conservatives, so Daniels could have been expected to be winding up for a jab at Obama. Instead, he said, “We must be, as we have been in our better days, our more successful days, a party of hope.”

Daniels went on to give a plug for empathy as an animating attitude for the GOP: “We must not only assert, but assert with credibility, that we understand what is going on in the lives of everyday people.” His pitch included a plug for Republicans directing themselves “almost entirely to the young people of this country.” In Indiana, Daniels explained, the GOP is “the party of purpose,” arrayed against Democrats who are “reactionary” and “negative” – “everything we must not be, as we address national events.”

If this sounds like a call for a mushy me-tooism, it isn’t. When Daniels took office, the state had an $800 million deficit. He turned it into a $1.3 billion surplus (although it will be eaten into in the current downturn). Since 2005, he’s saved roughly $450 million in the state’s budget and reduced the state’s rate of spending growth from 5.9 percent to 2.8 percent. “I tell you with certainty,” Daniels told his Washington audience, “concern about the debt and deficit has not gone out of style.”

“Mitch the Knife,” as he was nick-named when he headed George W. Bush’s Office of Management and Budget, has matched his fiscal probity with the restless innovation of a devoted policy entrepreneur. He leased the state’s faltering toll road to a European operator for nearly $4 billion. He created health savings accounts for Indiana’s poor. He deregulated telecommunications. And he attracted business to the state, with Indiana winning more foreign investment than any other state during the past two years.

A populist outcry against the toll-road deal dragged Daniels’ approval rating down to 37 percent at one point, and his tenure seemed a warning against putting a tightfisted technocrat in elected office. But opinion turned. He won re-election by 18 points last year. He won 20 percent of the black vote, and beat his Democratic opponent among voters under age 30 by 7 points.

Daniels counsels national Republicans to adopt a “no, but” approach. As he told an interviewer from National Journal, on cap-and-trade he’d say: “No, let’s not double the tax on poor people in the vain hope of moving the world’s thermometer. Here’s a way to conserve energy and protect the environment that doesn’t impoverish the nation.” On health care, he’d say, “Sure, let’s get people covered with health insurance, but here’s a much better way.”

His success has stoked speculation about a possible 2012 presidential run. Daniels has made Shermanesque disavowals of national ambitions, and expressed confidence that new national leaders will soon emerge. When they do, they should heed the lesson and message of Mitch Daniels, an exemplar of a winning conservatism.

Rich Lowry is a syndicated columnist. He can be reached via e-mail at: comments.lowry@nationalreview.com.

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