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WALLACE: The nation's governors are in Washington for their annual conference. And we want to talk policy and politics with one of their leaders, Indiana Governor Mitch Daniels.
And, Governor, welcome back to "Fox News Sunday."
GOV. MITCH DANIELS, R-IND.: Thank you, Chris.
WALLACE: It seems as this Republican race goes on, the GOP voters are growing less and not more satisfied with the field. Let me put up a couple of statistics.
A Gallup poll finds 55 percent of Republicans and Republican-leaning independents wish someone else were running.
And here's what former Florida Governor Jeb Bush this week, "It's a little troubling when people are appealing to people's fears and emotion rather than trying to get them to look over the horizon for a broader perspective."
Question -- are you troubled by the negativity, some would say, the smallness of this race?
DANIELS: Oh, from time to time -- on both sides, by the way. The president is one of the main perpetrators of negative politics. But -- and we can all wish, and I do, that it would subside some. But I don't necessarily blame the candidates. There's a certain dynamic to the race that leads to a magnification of small differences and people picking on each other.
WALLACE: Let me ask another aspect of it. You have said Republicans need -- particularly need time to focus on the economy and debt, and as you famously said once, to call a truce on social issues. Are you troubled when you see Republicans spending so much time talking about contraception and Planned Parenthood?
DANIELS: Well, let's remember -- they didn't start this, the president did, with a very intrusive liberty-limiting decision. They were asked to react to it. So, they answered the question.
No, I think when they get a chance -- Governor Mitt Romney this week talking about all the right issues -- and ultimately, that will be where this election gets decided. This economy is staggering. It's in very weak shape. It's the weakest recovery ever from a deep recession. We got the fewest number of Americans or percentage of Americans in the workforce working today, since the day of the stay- at-home mom.
And so, eventually, this is going to be a binary choice and it will be decided, I'm confident, on the biggest issues and biggest threats.
WALLACE: Are you impressed by Mitt Romney's economic plan as we just laid it out?
DANIELS: I'm very encouraged that -- and other candidates, by the way, in that field are talking about the right question. How do we get this economy growing, how do we stop killing growth -- as this administration does with every new action and regulation and threatened tax and so forth.
So, yes, I think that things are headed in a direction that will present the American people with a very good contrast and a positive alternative.
WALLACE: All right. I want to ask you a couple of political questions. We'll move on to policy.
DANIELS: I know you would.
WALLACE: Well, OK. But is too late for someone new to get into this race and to push it to a contested convention in August?
DANIELS: You are not asking the right guy. I'm not a great student in these things. I'm told it's not too late for people to file in a significant number of states with significant number of delegates -- as a technical matter.
As a practical matter, I don't think it's very likely. And I don't know what it would lead to.
WALLACE: Is there any chance -- are there any circumstances under which Mitch Daniels gets into this race?
DANIELS: No, sir. I crossed that decision bridge a long time ago. My family did. And I'm trying when I get the chance to play some role, look forward to helping our eventual nominee.
But running for president is something I never thought about doing and nothing change my mind.
WALLACE: So, Shermanesque statement -- if drafted, you will not run?
DANIELS: These types of things just don't happen, Chris. You've been covering these things a long time. We're going to have a nominee probably well ahead of the convention.
And a lot of these questions that really very intriguing I know right now will be long forgotten. And we'll have a debate about how we keep this country from going broke, how we restore the American dream, rebuild a stable and hopeful middle class.
WALLACE: OK. Let's focus on that. As you know, gas prices are rising sharply. Back when Barack Obama took office, gas cost $1.85 a gallon. It's now up to $3.67 a gallon.
In your formal response to the president's State of the Union speech, you blamed what you called extremist policies, extremist policy by the president to stifle domestic production and you said that that was a pro-poverty policy.
This week, the president talked about Republicans. Here's what he said.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: You can bet that since it's an election year, they are already dusting off their three-point plan for $2 gas. And I save the suspense. Step one is to drill and step two to drill and then step three is to keep drilling.
(END VIDEO CLIP)
WALLACE: The president said that the Republicans are playing politics with gas prices and a lot of it is beyond the control of any president and domestic oil production is the highest in eight years.
DANIELS: Let's give the president credit for one domestic policy that works. He wanted higher gas prices and he got them. He said it -- Secretary Chu said $8 are about what they pay in Europe. It would be great. Secretary Salazar said $10 and it still wouldn't be for drilling in the places where we know there's an awful lot of domestic production.
And so, they have gotten the doubling of gas prices and perhaps worse, is a conscious policy of this administration. Maybe the one thing they set out to do and actually accomplished.
And let's face it. When you lock up vast tracts of land where we know there is oil, when you lean against the shale oil and shale gas. They have about eight federal agencies now clamoring this greatest break we've had in the American economy in many, many years.
When you have environmental regulations that are going to raise the price of refining gas, possibly put some of our scarce refineries out of business, guess what? You are going to get higher gas prices.
WALLACE: But if I may, they say have opened up millions of acres, oil and gas exploration and that U.S. dependence on foreign oil is the lowest in 16 years.
DANIELS: No thanks to them. This is the product of openings that happened under his predecessor. He likes to talk about what he inherited. He inherited a more aggressive pro-energy policy. Since then, leases have been cut in half, permitting for new drilling is cut by two-thirds.
WALLACE: OK. Let's talk about the economy and you gave the numbers early and I want to want to come back to it, the question of just how strong this economy is, how fast the recovery is. Unemployment now down to 8.3 percent, that's the lowest in three years. New claims for jobless benefits this past week hit a four-year low and consumer confidence is at a one year high.
Is the economy getting better?
DANIELS: If the president thinks he's going to be s running on an economic success story, he is headed for a rude surprise in my opinion. The employment rate doesn't tell as much anymore, Chris. And this is widely written these days.
The employment rate against just fell below 64 percent. It's the lowest since the 70s and again, a lot of moms were staying at home.
Unemployment insurance claims may be down. But we've moved a couple of million people on the Social Security disability rules, which has become a new form of perhaps permanent unemployment for a lot of people.
So, this is not a pretty picture. And we ought not candy-coat it. We ought to recognize we're going to need a different mix of very pro-growth polices. I have said often -- until Americans are working again, until we have the revenue coming in to pay our bills and meet our debt, growth ought to trump everything else.
WALLACE: Finally, you just signed this month a law making Indiana the 23rd state, right-to-work state in the country, which means that people don't have to join the union to get a specific job. Question: What's wrong with unions?
DANIELS: Nothing is wrong with unions. And if that measure affected any way the right to bargain, the right to organize collectively, I wouldn't have been for it. That's completely untouched. All it says is the worker can decide whether or not it's worth the dues, whether they'd rather have that money themselves.
WALLACE: But doesn't that necessarily in a practical sense over the long run weaken unions? Certainly, the unions think so.
DANIELS: No, not necessarily. There are higher rates of unionization in some right-to-work states than there are in Indiana today. It really a matter of whether people think they're getting their money's worth. And we just knew it would bring more jobs to our state and that was my principal motive for doing it. And already, the phone is ringing and we are about to strike some agreement I think to put more Hoosiers to work.
WALLACE: All right. Back in 2006, you said that you opposed right-to-work as, in your words, too divisive. Now, the unions say, as a result of this decision to sign and make it a right-to-work state, that wages will go down and work places will become more dangerous.
DANIELS: Well, first of all, that's all bunk. Facts be could not be more clear that safety is unaffected, wages and job growth are much faster in the 22 right to work states than in the 28 that didn't provide this protection to workers.
Now for several years that really true I said -- I never said I was opposed to right to work, I said we can succeed under the labor laws we have. Ultimately, particularly in this terrible national economy I reluctantly came to the conclusion that we need to take this step if we were going to have the kind of opportunity state I wanted Indiana to be.
WALLACE: Governor Daniels, I want to thank you so much for coming in. It's always a pleasure to talk to you, sir. Please come back.
Up next, the Sunday panel tackles the rise in gas prices and the growing violence against Americans in Afghanistan. Back in a moment.
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