Dick Cheney's Dick Cheney.

• Author: THOMPSON, NICHOLAS

Meet OMB Director Mitch Daniels: The most powerful man in the Bush administration you've never heard of.

WHEN GEORGE W. BUSH SIGNED his $1.3 trillion tax cut into law, he thanked three people first: "Mr. Vice President, Secretary O'Neill, and Director Daniels" Mr. Vice President? Yup. We all know Cheney. Secretary O'Neill? Sure. That silver-haired guy who used to run the aluminum company. Director Daniels? Hmmm ...

Most people don't know Mitch Daniels, director of the Office of Management and Budget, but they should. The OMB chief has the most critical but unheralded job in government. He gets to stick his fingers in almost every federal pie, and Daniels has accumulated remarkable power since his swearing in. He has developed a close relationship with the president and inspired confidence among those around him. In fact, he has been deeply connected with all the decisions that have defined the Bush administration so far. He helped design and defend the Bush tax cut; he was the main architect of Bush's budget; he presides over decisions on which Clinton-era regulations stay and which ones go.

But that isn't surprising. Over the last two decades, the main battles in Washington have been fought over the size and scope of government, with the OMB director commanding the presidential battalions. Ronald Reagan will be forever known for David Stockman's slicing of the government and famous admission that the president's tax cuts were a "Trojan Horse" for helping the rich. Richard Darman, perhaps George H. W. Bush's most influential domestic adviser, is credited with--or blamed for--Bush's tax increases. Budget hawks Leon Panetta and Mice Rivlin helped keep Clinton fiscally in line early on. The more liberal Jack Lew expanded spending toward the end of Clinton's term.

Fittingly enough, given the intensity of the struggles over spending, all of these directors, including Daniels, have worked out of an office originally designed in 1883 for the secretary of war. But if he's at war, Daniels is a canny fighter who knows one can best administer the stiletto while in an embrace--a vastly different philosophy from that held by the churlish Republican congressional leaders like Tom DeLay and Trent Lott. Daniels, in fact, bears an uncanny resemblance to Dick Cheney. He's calm, unassuming, likable, self-deprecating, and very smart. Like Cheney, Daniels won the trust of the president through his loyalty, command of the issues, and dry wit. Like Cheney, Daniels is deeply conservative with a moderate demeanor. Like Cheney, Daniels is a major reason that the Bush administration has had success pushing its agenda through, despite the president's failure to win the popular vote. In his New Yorker profile of Cheney, Nicholas Lemann likened him to a serotonin uptake inhibitor. Daniels also has that same calming effect on those around him--an appropriate skill for a man who made a fortune at the company that produces Prozac.

Daniels' similarity to the highly competent Cheney doesn't bode well for liberals. Since George W. Bush announced his candidacy and the entire Republican establishment and its wealth started migrating toward Austin, the scariest thought for his opponents has not been that a Bush administration would push conservative policies, but that it would do so with consummate skill. Regardless of Bush's own personal abilities, talent has accumulated around him: from his early advisers to his campaign team to the merciless lawyers who prevailed in Florida to the successful CEOs who now run the government. These people know how to win.

True enough, the administration has stumbled a number of times recently, and there's evidence of liabilities created by the arrogant moral certitude of its corporate ethos. Jim Jeffords blindsided the party because the White House failed to realize what its sharp elbows and juggernaut conservative agenda felt like to moderates; blocking increased arsenic safety standards in drinking water suggested a blindness to the worries of average Americans. Still, the administration has done vastly better than anyone could have expected given the chief executive's inexperience and the circumstances of his election. In fact, if two things have become clear about Bush since he stood in the rain and took

the oath of office, they're that his administration will be deeply conservative and damn effective. He has assembled the most formidable conservative team since Ronald Reagan's first term. And Mitch Daniels is one of its best players. We should all get to know him better.

Hurricane Mitch

On the day Bush signed the tax cut into law, Daniels was darting around frenetically--from the White House to Capitol Hill to his office to a co-worker's baby shower--before finally settling down for an interview. His small frame and perpetual motion brought to mind a bureaucratic Allen Iverson with a receding hairline.

Daniels speaks with a strong Midwestern twang and uses phrases like "I don't reckon." He works out of the cavernous former war room which he has sparsely decorated with pictures of his four daughters, a portrait of Eisenhower, and a landscape from the National Gallery that Daniels picked out online because he didn't have time to go there in person. Conspicuously absent are the usual Washington vanity photos. The only hint of Daniels' power is a picture squirreled away in the corner of Bush signing Daniels' OMB appointment. But the image doesn't even show the president's face--just his hand and the pen.

Daniels comes from Indiana, a deeply conservative state that still has Midwestern sensibilities. The Hoosier state always supports GOP candidates for president, but it is dominated by laid-back Republicans, not the reflexive Washington-haters who make up so much of the party's base. It's even possible for moderate Democrats, like Sen. Evan Bayh, to win elections there. The apotheosis of Indiana Republicanism is Sen. Dick Lugar: strongly conservative and entirely likable.

The culture that produced Lugar also produced Daniels, and appropriately enough, Lugar...