Legend has it that when a famously frugal Mitch Daniels worked as an aide on Capitol Hill 30 years ago, he once fished quarters out of the Tune Inn toilet to save money for his beer.

Even though Daniels has lived most of the past two decades in Indiana, the Republican governor spent many of his formative political years in the 1970s and ’80s in Congressional politics on Capitol Hill. He ran Sen. Dick Lugar’s (R-Ind.) campaigns, was a top aide to the Senator on Capitol Hill, served as executive director of the National Republican Senatorial Committee and was tapped to be President Ronald Reagan’s chief political adviser before eventually being appointed as director of the Office of Management and Budget.

Daniels’ almost 15 years in Washington, D.C., totals more time inside the Beltway than many of the other potential presidential candidates, except for former Sen. Rick Santorum (R-Pa.), former Speaker Newt Gingrich (R-Ga.) and Rep. Ron Paul (R-Texas.). And according to Daniels’ former colleagues, his early experiences as a Senate aide were apparent in the way he ran his gubernatorial campaigns, and give clues to what kind of presidential campaign he could run — if he decides to jump into the race.

First and foremost, former aides describe Daniels, who writes his own campaign ads and speeches, as a true cheapskate.

“Parsimonious, he was legendary for that. Those were the days in which Sen. Lugar, as a matter of policy, turned back money to the federal government,” recalled Jeffrey Bergner, who served under Daniels as Lugar’s legislative director before succeeding him as chief of staff in 1983.

A VW Beetle and Rat Problem

Daniels kicked off his political career right out of college, working as vice president of the advertisement firm Campaign Communicators, which also served as the hub for Lugar’s successful re-election campaigns for Indianapolis mayor. It was at Campaign Communicators that Daniels lost his only race ever as a manager: Lugar’s failed bid against then-Sen. Birch Bayh (D) in 1974.

But two years later, with Daniels as his campaign manager, Lugar defeated three-term Sen. Vance Hartke (D) by nearly 20 points. Soon after, Daniels moved to Washington, D.C., to work as Lugar’s top aide for the next five years.

It was a different era on the Hill: Robert Byrd (D-W.Va.) was Senate Majority Leader, Tip O’Neill (D-Mass.) was Speaker, the Hart Building was under construction, and there were still spittoons in the offices.

Daniels’ former staff recall a frugal, intense boss who filled legal pads with notes at daily staff meetings and always split the lunch bill. When staffers traveled between Indiana and D.C., they were forced to stay with each other instead of in hotels.

“The annual discussion with Mitch about salaries was not the high point of the year,” Bergner recalled. “We always joked that no matter how difficult it was for us, it must be more difficult for his wife, Cheri, on a full-time basis.”

He was equally stingy in his personal life: He lived in a basement apartment on F Street Northeast between Second and Third streets — an undesirable neighborhood in the late 1970s — with worn-out furniture and bars on the doors and windows. He drove a beat-up, yellow Volkswagen Beetle with missing floorboards on the shotgun side.

“You could put your foot through (the bottom of the car) if you wanted to. He kept everything for as long as possible,” said Chip Andreae, a junior staffer in Lugar’s office during his first term who eventually became the Senator’s chief of staff in the mid-1980s.

As a Congressional staffer, Daniels frequently patronized the bars southeast of the Capitol on Pennsylvania Avenue, including the Tune Inn and Hawk ‘n Dove. He played on Lugar’s team in the Congressional softball league. He even became a Washington Redskins fan.

Daniels was also intensely loyal to his staff. One former colleague remembered calling him at 2 a.m. to ask him to come over to his place and help him exterminate a handful of rats who had eaten through the wall in his apartment. The duo trapped the rats, and while his colleague beat them with a racquetball racquet, Daniels stabbed the rodents with an ice pick. It worked.

Lugar’s staff enjoyed their share of practical jokes as well. As part of their lobbying efforts for a bill, the home construction lobby once sent chopped two-by-four wooden planks to Lugar’s office that his staff used to create a barricade in front of Daniels’ office area.

From Operative to Candidate

In 1984, when Lugar became chairman of the NRSC, Daniels began work as the executive director of the committee during a cycle that elected, among many Republicans, now-Senate Minority Leader Mitch McConnell (Ky.). It was at the NRSC that Daniels once again honed his skills as an operative, recruiting candidates to run for Senate and advising incumbents on their re-election strategies.

Charlie Black, who worked with the NRSC as a consultant that cycle, recalled the early preparations that Daniels and Lugar made for Sen. Jesse Helms’ campaign out of an abundance of caution — before the North Carolina Republican even made a decision about running for another term. Fairly late in the cycle — less than one year before Election Day — Helms decided to run again, and he went on to defeat Democratic Gov. Jim Hunt by less than 4 points in a hard-fought and, for the time, very expensive campaign.

After the 1984 cycle, Daniels was recruited to be Reagan’s political adviser in the White House, where he worked for two years until he moved home to Indiana in 1987 to run the Hudson Institute, a conservative think tank.

Shortly thereafter, Daniels once again got a call to return to Washington. When then-Sen. Dan Quayle (R-Ind.) became vice president after the 1988 elections, then-Gov. Robert Orr (R) offered to appoint Daniels to fill the Senate vacancy. Daniels declined, citing family reasons, and now-Sen. Dan Coats (R) got the job instead.

Daniels stayed in Indiana, making millions as an executive for Eli Lilly & Co until 2001, when a newly elected President George W. Bush appointed him to be director of the Office of Budget and Management. In 2004, Daniels ran for governor. 

Even his closest friends weren’t sure how Daniels would do on the stump, but he eventually cleared the GOP primary and defeated then-Gov. Joe Kernan (D) by 8 points.

“I never thought he would be as a good a candidate as he was. But when he ran for governor, he ran away with it,” Rep. Dan Burton (R-Ind.) recalled. “I just thought he was more of a tactical person, a person who worked on budgets, on spending, and doing the job for the Senatorial committee. I never thought of him as a candidate like that. But when he ran for governor of Indiana, he had an extraordinarily good campaign — and he was a darn good candidate.”