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Publisher’s Note: U.S. Sen. Evan Bayh is on many short lists - including, apparently, Barack Obama’s - for vice president in a decision that will be made by late August. The Howey Political Report (changed to Howey Politics Indiana in October 2007) published this analysis of the Bayh governship on Aug. 17, 2006 as he prepared to enter the presidential race. It was a review a decade after his governorship ended. With the meteoric rise of Obama in November 2006, Bayh dropped out of the presidential race in stunning fashion that December, endorsed Hillary Clinton in September 2007 at a time when her nomination was considered "inevitable," with many believing he was positioning himself for the vice presidency. With his Indiana organization’s "seamless" integration with the Clinton campaign, Bayh helped her forge a razor-thin victory last May 6, though he never criticized Obama. Now, as Obama surveys the Electoral College maps, the idea that with Bayh on the ticket, Indiana’s 11 votes could go to the Democrats for the first time since 1964 has projected Indiana’s junior senator on his short list.
By BRIAN A. HOWEY
INDIANAPOLIS - It seems so long ago that we watched with real anticipation Evan Bayh’s Hoosier governorship as it commenced in 1989. It began in an era before e-mail and the Internet. 
It was an era where the Cold War ended and we talked of the "peace dividend." Crack cocaine had yet to spread its awful tide beyond Fort Wayne. We were still executing our worst criminals in the electric chair. It was a different administration in that instead of being the capstone of a political career as we had seen with most of our govenors, it was just the ambitious beginning.
The Bayh governorship, which ended with an 80 percent approval rating and a virtual coronation into his father’s old U.S. Senate seat two years later, will become one of the basic planks on the now unfolding (vice) presidential aspirations. Evan Bayh was an executive for eight years, making life and death decisions, fighting crime, educating the young and forging jobs. He created the modern campaign mode, matching a relentless message into a communication network that went over the heads of legislators and into the minds of the people. He totally understood the message and underscored his themes time and again.
It’s been 10 years since Bayh walked out of his second floor Statehouse office. That’s more than enough time for an assessment. It has been reduced down to a short, tidy paragraph on Wikipedia and history books: More conservative than his liberal Senator father, Gov. Bayh ushered in billion-dollar surpluses, steadily increased education funding, created the 21st Century Scholars program, the Access Indiana website and about 390,000 jobs. He never raised taxes and, in fact, signed the biggest tax cut in state history. The Wall Street Journal summed it up succinctly in 1992, saying, "Mr. Bayh’s record is one of a genuinely fiscally conservative Democrat." Political observers in both parties - partially out of admiration and some with disdain - would call Evan Bayh a "Republicrat."
The late columnist Harrison J. Ullmann - who was the initial contact between Bayh and Frank O’Bannon that forged the mold-shattering 1988 Democratic ticket - lumped him in with another ambitious man, Stephen Goldsmith, and they became the "Bayhsmiths."
"We have given the Bayhsmiths our governments so they may use Indiana’s public offices to demonstrate to the rest of America that they are competent for America’s highest offices. The Bayhsmith named Evan, returns from conferences of governors to tell us we are envied for our cheap and tiny state government," noted Ullmann.
Six months before Bayh left the governor’s office, he delivered the keynote address before the 1996 Democratic National Convention in Chicago. He explained why he believed he was chosen for the keynote in an interview with Margaret Warner: "I believe it has something to do with having a record in Indiana of balancing budgets but still being fiscally or socially compassionate, of cutting taxes for working people but still finding the means to provide more for education and health care and the other needs of our society, reforming welfare in a responsible way, and those kinds of things," Bayh said. "It probably has to do with the fact that I can speak with some authority about the President’s efforts and what he hopes to do for our country."
Fiscal conservatism from the bully pulpit
Bayh talked about fiscal conservatism, a moderate social agenda and use of the gubernatorial bully pulpit as a commanding and influential view of Hoosier society. Bayh strayed infrequently from the themes he talked about at the earliest part of his political career. His mantra was "no new taxes," and while Republicans like to remind folks of his cigarette and hospital tax increase proposals in 1993, the Bayh years produced the kind of fiscal conservatism that back in 1984 would have been more akin to Doc Bowen. Former Republican House Speaker Paul Mannweiler, explains, "He wasn’t a very hands on guy. He did a lot of controlling the message. He was very good at saying what was popular." Both Mannweiler and long-time Senate Finance Chairman Larry Borst say they had few face-to-face meetings with Bayh during his eight years. "You dealt with his staff more than anything," Mannweiler said.
A talent magnet
The Bayh staffing has become one of his biggest legacies. His political machine not only revived the once moribund Democratic Party, but forged upsets by Secretary of State Joe Hogsett (over Indianapolis Mayor Bill Hudnut), Attorneys General Pamela Carter and Jeff Modisett, the extension of the Democratic gubernatorial dynsasty to 16 years with Lt. Gov. Frank O’Bannon’s upset win in 1996 over Stephen Goldsmith, and Bart Peterson’s epic derailing of the Marion County GOP machine in the 1999 Indianapolis mayor’s race. The governor had coattails, bringing along additional Democratic House seats each time he ran. He is in thorough command of the Indiana Democratic Party to this day, having selected the last several party chairs. It is a party that is tacitly gearing up for the Bayh presidential run everyone knew would come some day.
"This group of superb public servants — under his leadership — laid the groundwork for his overwhelming 1992 re-election, and it can fairly be said, Frank O’Bannon’s success in 1996," says William Moreau Jr., one of Bayh’s chief-of-staffs.
Mannweiler mentions current Indiana Supreme Court Justice Frank Sullivan, who helped craft Bayh’s fiscal conservatism into the fitful budgets that passed during the troubled recession of the early 1990s. Another was James Verdier, who helped rein in monstrous Medicaid costs that had the potential of devouring state initiatives.
"Evan Bayh called to service some of the most remarkable human beings who have ever held positions of responsibility in Indiana state government," Moreau added. "I would happily invite any objective analyst to match those folks’ credentials–and records — with any group of Indiana public servants ever assembled. These were honest, ethical people who got up every day trying to figure out how to do their jobs better and, yes, they were motivated by a governor who demanded excellence."
Moreau continued, "Evan Bayh was the kind of governor you wanted to please and the kind of governor you never wanted to disappoint. There were consequences for disappointment, and I would add to the list of accomplishments Evan Bayh’s ability to direct people to return to the private sector, when necessary. This recruitment of excellent people, tight ethical and fiscal controls, and management decisiveness — amplified by EB’s extraordinary communication skills — convinced Hoosiers that Democrats could, in fact, govern. This was no mean feat after 20 years of rule by the other party. Indiana Democrats had literally lost a generation to state government service, and Hoosiers were understandably skeptical about our ability to be good stewards of their money and their ambitions.
"He recruited people of all colors, religions, backgrounds, sexual orientations, etc. There were so many ‘firsts’ among his appointees to the executive branch, the judiciary and boards and commissions we literally lost count," Moreau said.
Learning curve
While Gov. Bayh left office with the huge $1.6 billion surplus and lofty approval rating, the first years were troubled. The new governor came into office with scant time to present his first biennial budget (and for this reason, HPR argues that the Indiana General Assembly should convene at the first of February in long-sessions after a gubenaotrial election). His second budget - in 1991 - exposed his enigmatic leadership skills in the Indiana General Assembly that eventually saw two contentious special sessions that lasted until mid-June. He had few Statehouse relationships and that was exacerbated by the first 50/50 split House in Indiana history in 1988. He didn’t submit his first spending plan until fewer than 15 sessions days were left in 1989.
Indiana Chamber President Kevin Brinegar, working on the Finance staff, recalls, "It was the first time in a long time there had been a Democratic governor and you had the 50/50 house. We’d gone through this period of time where Republicans put budgets together in the House, and the Democrats would put in all these pet projects, get it over to the Senate and it would usually be the Senate which would clean it up further."
Brinegar said that Ways & Means co-chair B. Patrick Bauer put the budget together "per se." The Republican co-chair, current Indiana Manufacturers Association President Patrick Kiely, went to his caucus with copies of Democratic amendments from recent years, passed them out and said, "Who wants to offer this one? This one?"
The Democrats didn’t shoot them down on the floor; the Senate didn’t clean it up and Gov. Bayh’s first budget was "hundreds of millions of dollars over balance," Brinegar said. Bayh vetoed that bill. The budget that passed in the 1989 special session was even bigger.
By December 1990, the budget forecast was for a $966 million deficit by June 1993. Bayh imposed a hiring freeze, and 3 percent agency reductions. State agencies returned $233 million in unspent funds; with $67 million more reversions in 1992 that finally balanced the budget.
His second biennial budget in 1991 was submitted early - in January - but didn’t conclude until after two special sessions. That produced one of the hallmark phrases of his governorship. Frustrated by legislative leaders, Bayh turned to what he called the "white hot heat of public opinion." He didn’t distinguish between parties, noted John Ketzenberger in a 1992 analysis for the Fort Wayne Journal-Gazette.
Unlike Govs. Robert Orr, Doc Bowen and Matt Welsh who were creatures of the legislature and worked from within, Bayh took his message right over their heads and drug them along. Or he just claimed victory no matter what actually happened. Think of the budget he vetoed with gaming. The legislature called his bluff on dangling gaming as a way to get his budget passed. Instead, House Speaker Michael K. Phillips and others took the gaming and the Republican budget.
"As I recall he just claimed victory as time went on," says Karl Berron of the Indiana Realtors. "Same with the hospital tax increase. After it was killed by the legislature he took credit for keeping taxes down with a fly-around. Our polling through that period always showed that the public trusted Gov. Bayh more than Republicans on taxes. It drove them nuts."
A record re-elect
Despite the recession and budget troubles, Bayh had successes that included landing in November 1991 a billion-dollar United Airlines maintenance facility in Indianapolis. In March 1992, he revealed plans to balance the budget.
There were other steps that Bayh took that impressed upon Hoosiers a decisive leadership style. He fired Hoosier Lottery Director Jack Crawford after a messy extra-marital affair became public. He ended the prison furlough program following the murder of a Mishawaka woman by her ex-husband, Alan Metheny. In November 1992, Bayh was re-elected with 62 percent of the vote, an Indiana record that still stands. His national rising star was officially cast.
But one more messy budget
His second term commenced with one of the most controversial budget sessions in state history in 1993. The state was still under considerable economic duress. Democrats controlled the House; Republicans in the Senate. The only way out of these disparate spending priorities turned out to be riverboat casinos. Democratic House Speaker Michael K. Phillips pushed the casinos, but Bayh vetoed the budget just hours before the state’s fiscal year was to end. "Everybody had wanted to go home," Brinegar recalls. "Some folks were really being hindered financially not getting back to their jobs. In the end, Gov. Bayh vetoed the budget because of the gaming, and legislature almost immediately overrode.
Through Bayh’s first three, torturous budgets, there was one consistency: no new taxes, though at one point Bayh did propose cigarette and hospital tax increases. While the governor and legislators could point to no general tax increases, the burden shifted to property taxes, leading Lt. Gov. Frank O’Bannon to campaign in 1996 on a platform of tax reform (though that didn’t occur until 2002).
Earl Ryan of the Indiana Fiscal Policy Institute and David Bennett of the Taxpayer Research Association acknowledged that the first three Bayh budgets were creative in what was widely called "smoke and mirrors."
"They had to do some creative accounting during the course of the recession to avoid tax increases,” explained Ryan in a 1994 HPR interview. "Now that the revenue system is beginning to produce, they’ve gotten over the hard part."
There are more explosives to dodge over the next two years. The Bayh administration targeted more than half a billion-dollars in Medicaid cuts that had the potential of swamping state finances. In their 1994 interview, both Ryan and Bennett were in chorus that Bayh, Medicaid chief James Verdier and his Budget Director Jean Blackwell stepped on a lot of feet. "They made a lot of client groups mad at them," Ryan said. "At the same time, they managed things so that no state program was decimated. Education complained, but nonetheless it was a slowdown in growth and not a huge cutback."
Added Bennett, "They made everybody mad, which means they did a pretty good job. A lot of people can take credit, but Evan Bayh was the governor. This came on his watch, and he didn’t raise taxes. We go through the recession without any tax increases many other states had to go through."
Welfare and wages
The latter part of the Bayh governorship was marked by two issues that demonstrated his centrist path. He was an early pioneer in welfare reform, coaxing out of the Clinton administration 50 federal waivers. Gov. Bayh would claim to have helped transition 1,000 familes per month from welfare to work, saving $140 million. This was one of the hot issues that led to the 1994 Republican revolution in Congress that Bayh missed due to fortunate election cycling. In fact, he was in front of the issue before most in his party. Welfare caseloads had risen 34 percent between 1989 and 1994.
He explained this facet of his fiscal conservatism to Margaret Warner on the eve of his 1996 Democratic National Convention keynote: "I view balancing the budget and fiscal responsibility as a necessary precondition to social compassion and progress. The people who get hurt first in our country, the poor, the sick, the young, are those who depend upon the government. So if we go bankrupt as a state or a country, they’re the ones who get hurt first. If we’re going to do more for education, more for health care, more for the environment, we only can do that if we have the money. And that means balancing our budget and growing our economy. So I think that the priorities would be a little bit different."
"Many feared a social calamity after these waivers," notes University of Maryland Prof. Douglas J. Besharov of the American Enterprise Institute. "But in the years since, although researchers have strived mightily, they’ve found only small pockets of additional hardship. Even better, the earnings of most single mothers actually rose."
Besharov, writing this week in the New York Times, gives some of the credit to Bayh-style welfare reform, which he says accounts for a 25 to 35 percent reduction in welfare caseloads, but also credits an improved economy. "Yes, welfare reform reduced welfare dependency," Besharov observes, "but not as much as suggested by the political rhetoric, and a great deal of dependency is now diffused and hidden within larger social welfare programs."
The second was the prevailing wage showdown in 1995. Republicans, swept back into control of the Indiana House during the 1994 tsunami, had been approached by local governments and contractors to help cut school and municipal construction costs. That resulted in the prevailing wage legislation that produced an outraged labor movement. Some 25,000 workers gathered for one of the biggest Statehouse rallies ever.
Both sides dug in. Mannweiler remembers appearing on a WFYI-TV show taping as the session was ending with House Minority Leader John Gregg. "He noticed that Sen. (Robert) Garton and myself weren’t very animated about prevailing wage and he sensed something was up." Gregg rushed back to the Statehouse where he learned that Bayh wasn’t going to hold up the session with a prevailing wage veto.
That brought a great deal of grumbling from organized labor about "carrying the water for Evan." Brinegar said that Gov. Bayh had the attitude of, "They may be upset, but where else are they going to go?" After it became law, there were no studies available to verify that prevailing wage saved local governents anything.
The auto excise cut
Throughout his two-year tenure as Republican Chairman, Al Hubbard constantly complained about how "Evan Bayh is stealing 
our ideas." The classic example of this came in 1994-95. Legislative Republicans had been proposing an auto license plate tax cut. At first, Gov. Bayh was not enthused. But as the economy heated up and the surpluses grew, Bayh became a convert.
"Borst had concerns," Mannweiler recalled. "He didn’t think we could afford to do it; maybe phase it in. But with so much money coming in, Borst agreed and Gov. Bayh jumped out front and took credit for it. But it really was a Republican plan. We sped it up." Yet the indelible image that emerged was Bayh with the huge Indiana license plate that read "Tax Cut" being sliced in half.
Bookends on the ‘Education Governor’
Gov. Bayh called himself the "Education Governor" and he presided over a 7 percent increase in 1989, another 7 percent in the 1991 biennial budget during the recession. Bayh would boast $3.1 billion in new monies for education during his two terms, and another $1.5 billion for higher education. He has received national attention for his 21st Century Scholars program that gave college scholarships to some 34,000 lower income Hoosier students.
But the Bayh governorship was sandwiched in between two bolder initiatives - Gov. Robert Orr’s 1987 A-Plus program that raised taxes, and Gov. Frank O’Bannon’s establishment of the Education Roundtable and increased course and accountability standards. There were significant education initiatives on either side of Gov. Bayh that were far greater in reach and controversy.
A prudent governorship
His crackdown on deadbeat parents for child support, a 40 percent reduction of drunk driving, an expansion of in-home care for seniors, a 4 percent reduction of the state workforce (outside of corrections), and the elimination or reduction of 650 fees all point to what could be termed prudent Bayh leadership.
The Bayh governorship presided over the crack cocaine crisis that engulfed Fort Wayne in the late 1980s and then spread to Anderson, Muncie, Bloomington and Indianapolis, which was recording 160 homicides a year in the mid-1990s. Bayh responded by adding 4,000 new prison beds.
It was on the crime issue that produced one of the more memorable sequences and photos of his governorship. Gary had become Murder Capital USA again. On Oct. 3, 1995, Bayh paraded into the Steel City with 50 Indiana State Troopers and 25 squad cars. "Our city has endured economic and social dislocation of immense proportions for several decades. This support helps us to grapple with an important fallout of that dislocation–too many guns, too much drug abuse and trafficking, too much violence," said Gary Mayor Thomas Barnes in the Post-Tribune.
Achievements, disappointments
As for the disappointments, Moreau explains, "I have a few. I think folks grossly underappreciated the tough decisions Evan Bayh made every day to keep the state budget in the black. I think (First Lady) Susan’s incredible contributions were undervalued. Her literacy efforts changed many, many lives. Certainly, there were some knuckleheads who snuck through the vetting process and screwed up royally, but I do believe history must record that Evan Bayh led a scandal-free administration. I don’t think folks appreciated the way EB broke the back of the 2 percent clearance card system and mentality. On the political front, Joe Hogsett’s defeats were so painful, as was Stan Jones’ and the 1994 landslide that buried Katie (Humprheys), Tim (Jeffers), Elmo (Gonzalez) and Allison (Wharry) and cost us the House. Awful."
Former Indiana Republican Chairman Rex Early recalls Bayh as somewhat of a micromanager. "He knew what was going on in each of his departments. He did a fairly decent job," said Early, who served with Secretary of State Bayh on the 1986 legislative and congressional recounts in Elkhart and St. Joseph counties. Early said Bayh was ever conscience of the polls, including the era when Toyota wanted to locate a plant at Princeton. It took Bayh some time to sign on, Early said, particularly after Bayh had criticized his 1988 opponent, Lt. Gov. John Mutz, over the Japanese Suburup-Isuzu plant at Lafayette.
A ‘caretaker governor’
In 1997, HPR’s analyzed the departing Gov. Bayh: Many observers have been quick to consign the term "caretaker" to Bayh’s two terms in office. The political advantages that come with that reputation have propelled Bayh into the national consciousness as a true "New Democrat" at a time when President Clinton strayed both right and left in the spectrum.
The term "caretaker" can be seen as negative. But Bayh was a cautious governor who worked the fringes and margins of what state government can do. The fact that he did not offer the bold steps of Doc Bowen on an issue like property tax reform or Gov. Bob Orr’s "A-Plus" education reforms allowed the caretaker tag to persist.
What you have to remember is that Indiana’s governorship is constitutionally weak. The governor’s veto can be overridden by a simple majority and it was such a maneuver that opened Indiana lakes and rivers to casinos in 1993. Bayh came to the governor’s office with an Indiana House split 50/50 and had few working relationships with Republican and Democratic leadership. It wasn’t until the sixth year of his tenure, for instance, that Bayh and Senate President Pro Tem Robert Garton were able to settle into a productive working relationship that helped produce the state’s largest tax cut in history last year.
The storminess of his relationships with the legislature were not confined to Republicans. Many Democrats chafed under his elusive stewardship and the number of unfunded programs and declining services that would have fed their political constituencies.
While Indiana has a $1.6 billion surplus, it also has a decrepit road system and unbuilt highway arteries from Indianapolis to Evansville and from Lafayette to Fort Wayne.
The Daniels contrast
The advent of the administration of Gov. Mitch Daniels draws a sharp contrast to that of Gov. Bayh. It is safe to argue that Gov. Daniels has exposed more political capital in 18 months than Gov. Bayh did in eight years. Bayh advanced to the U.S. Senate with much of his gubernatorial capital. A classic example of this contrast came in 2005 when Daniels went to his suburban conservative base and sold a tax increase for an NFL stadium to be located in downtown Indianapolis that will benefit a Democratic mayor and City-County Council. That wouldn’t have happened during the Bayh-O’Bannon era. A big constrast between Bayh and Daniels is that there is little bitterness expressed by Republicans towards Bayh as he prepares his presidential campaign.
Moreau counters, saying, "OK, it may not have been ‘Camelot on the White River,’ but the eight years of the Bayh/O’Bannon administration were among the best in Indiana’s history by any objective measurement of job creation, fiscal stewardship, environmental protection, support for education and diversity of folks called to public service. Those of us who were lucky enough to serve are all still very proud of that service and remain very close to today."
The difference is that like most Indiana governors, their tenure at the Statehouse is their final political chapter. For Evan Bayh, it was the second act in what was widely perceived as a career that would take aim at the White House.
"This is the guy who knew where he wanted to go," the Chamber’s Kevin Brinegar. reflected this past week. "That was widely established pretty early and he worked well within the boundaries of that. He worked politically as governor to get to where he wanted to be."
The overall notion when it comes to Evan Bayh is that his years as governor had been good for Indiana. There were flashes of greatness and drama, as well as an overall steadiness, along with some missed opportunities that would have been politically perilous. He certainly projected a true two-party dynamic into the state once dominated by Republicans.
Perhaps, given his presidential aspirations, he is better suited as a U.S. senator than a governor. As governor, his political ambitions fettered him to policy standards that had to be kept in check.
Tags: Al Hubbard, Bob Garton, Evan Bayh, Frank O'Bannon, James Verdier, Kevin Brinegar, Paul Mannweiler, Rex Early
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