It’s an ornate office in Indiana’s beautifully maintained mid-19th century Capitol, but the 49th governor of Indiana, Mitch Daniels, is not dressed to match the setting. He’s just returned from spending the night in Princeton, Ind., staying at a constituent’s house – as he often does around the state – and he’s dressed in a work shirt and jeans.

I’ve known Daniels since he was a staffer for Sen. Richard Lugar in the 1980s, and for years he struck me as one of the least likely candidates for public office. He’s got strong, mostly conservative convictions; he doesn’t suffer fools (and elected politicians) gladly; he doesn’t care if others don’t like him. All those characteristics were on display when he ran the Office of Management and Budget for George W. Bush between January 2001 and June 2003.

But when he returned to Indiana from Washington, he started running for governor and was elected with 53 percent of the vote in 2004. After four sometimes controversial years as governor – he sold off the North Indiana Toll Road and persuaded the legislature to smooth out the state’s time zone boundaries – he was re-elected 58 percent to 40 percent in 2008 even as Barack Obama was carrying the state.

As much as any American politician of his generation, he’s proved that cutting spending and gaining a reputation as a skinflint is good politics.

Now Daniels is being mentioned as a presidential candidate, and he doesn’t deny that he’s thinking about it. He’s been holding dinners with national policy experts in Indianapolis, much as George W. Bush did in Austin, Texas, a dozen years ago.

And he says that, if he runs, he’ll be a different kind of candidate. As for “the federal fiscal picture – and why don’t we have the philosophic debate tomorrow – as for today, can we agree that the arithmetic doesn’t work? We’re going to have higher and higher levels of debt.”

He goes on. “This is a survival-level issue for the country. We won’t be a leader without major change in the federal fiscal picture. We’re going to have to do fundamental things you say are impossible.”

He believes that “Democrats are better positioned to do this, but they’re not going to lead. This will probably be a Republican responsibility.” To do what exactly?

To propose “fundamental changes in entitlements and in the size and scope of the federal government.” Because “the machine is going TILT.”

He thinks voters may be ready to support such changes because they’ve had a searing experience with debt, and their lives are changing. Younger people may be ready to put up with lower Social Security benefits for high earners because they’ve seen that some companies’ new hires aren’t getting the pensions and benefits their elders got. “There’s nothing radical about this. It’s already happened all over the place.”

He’s also got some more short-term proposals – a payroll tax holiday to stimulate the economy, reviving the presidential power of impoundment (not spending money Congress has appropriated) and a moratorium on federal regulations.

As OMB director, Daniels was on the National Security Council, and as governor he’s visited Indiana troops around the world. He says, “It’s important to support the commander in chief” on Afghanistan. But he’s open to cuts in defense spending beyond those Secretary Robert Gates has imposed. “No question that the system is rigged to overspend,” he says, “like health care. No question that defense dollars could be spent better.”

“But back to not becoming Greece,” he says. “Can we continue with every mission we’ve assigned the military indefinitely? Is every one essential to the safety of Americans?”

“The answer may be yes,” he concedes, “but you may have to stop doing some things completely. We are now borrowing the entire defense budget from international investors.”

You can almost see the green eyeshade as he speaks. It’s been noted that Daniels is short and balding (with a combover), that he speaks with just a bit of a Southern country twang (he moved to Indiana from Tennessee and Georgia at age 10) – hardly a glamorous candidate.

“I’m not a long-range planner,” Daniels says, when asked if he’s running. “I play the ball where it is.” But if he runs, he promises to be more of a long-range planner if he runs than any presidential candidate we have ever seen.

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