With just few days left in his second and final term, Indiana Gov. Mitch Daniels sat down with CNHI Statehouse Bureau Chief Maureen Hayden to share some thoughts about his eight years in office.

Much of the conversation focused on the Daniels’ philosophy about limited government and his efforts to bring more efficiency and accountability to state government spending.

Daniels’ tenure as governor followed a career spent in and out of public service, working for former U.S. Sen. Richard Lugar, presidents Ronald Reagan and George W. Bush. He was also head of the Hudson Institute think tank and a top executive at Eli Lilly & Co.

Supporters and critics alike agree that the Republican Daniels transformed Indiana state government; through a series of measures he brought from his work in the private sector, he slashed state spending, cut the number of state employees, implemented performance metrics, outsourced some public services and took other steps that resulted in a financial turnaround for the state.

He came into office facing an $800 million budget deficit. As he leaves office, Indiana has a $1 billion budget surplus.

Here are some excerpts from that interview:

On his first experience working in government, as an intern and later chief of staff for then-Indianapolis Mayor Richard Lugar in the early 1970s:

“It was very useful…You see how important good government can be to an ordinary person; the protection of life and property, the basic services that we sometimes take for granted, though we shouldn’t. I loved local government as a young person. I used to say, ‘If it was only getting a dead dog dragged off somebody’s yard, at the end of every day, could say I did that. That mattered to them.’ ”

On his later experiences working in Washington, DC., as a Senate staffer for Lugar and later in the White House:

“I saw the other extreme, the federal government, which is just a dysfunctional wreck and in so many ways, just a disgrace. And I think somewhere in there, (I developed) this obvious thought …which has been especially important to say to Republican audiences: If government should be doing something, it should be doing it very well and we should all agree on that.

“You know it bothers me how divided people are these days, so quick to throw rocks at each other, so I look for things that everyone should agree on. So here’s one: Let’s agree to find a way to build infrastructure. But here’s another one: whatever government does, it should do really well.”

On making government work better:

“So if you’re a believer in limited government as I am, you should think that the sphere of activity is limited and government shouldn’t get outside it. But inside it, you should be really determined for the same reason: that every dollar be well spent. And, on other hand, if you believe in a large and very active government, I would think you’d be the most offended of all if it’s botching the job and wasting money, because then it’s failing to serve people. You also should want every dollar spent well. But too many in the first group stop when they think they’ve limited the government and the second group acts like they don’t care at all if government is ridiculously wasteful and inefficient.”

On Lugar’s influence on his view of government:

“My views (on government) probably formed working for Dick Lugar…I had a generally Libertarian outlook on things, but like a lot of young people, I sort of sampled this and sampled that. I didn’t have any firm grounding until I started working for him. I might have wound up in the very same place if that (opportunity) hadn’t come along.  But I have to believe that just watching him, listening to him, seeing his very thoughtful view of the world (had impact.) He’s a deep believer, of course, in free institutions and free markets as the best way ahead for the largest number of people. So that’s probably where I started.

“I’m for free markets because they’re good for people at the bottom. And I’m for free institutions and limited government because I think those are the policies that respect human dignity and individual freedom. So if your values are freedom of the individual, and respect for each person’s dignity, and upward mobility -- called the American dream -- then limited government is the right answer.”

“And it’s a complete misrepresentation to suggest that it’s about the haves…Whenever I went to a (Republican) party dinner, over and over and over I said this and I would remind people: ‘You know we’re proud of everyone in the room, we’re grateful for you being here and your help. Never forget that our cause is not about the people in this room, who can take care of themselves. It’s about the people who couldn’t afford a ticket, but would like to one day or would like to have the option to.”

On why he’s for limited government:

“You know this ‘big government paternalism’: One, it ruins economic opportunity. Government takes the money and it doesn’t create the new jobs and the hope that you need. And along the way, it turns people from creatures of dignity into objects of therapy; into these ‘poor dears,’ who need someone to tell them what to do…

“I want to say this, again. I want to be clear about this. I’ve tried to explain why I believe in limited government: because I believe in freedom of the individual, respect for the dignity of every person, and upward mobility – I want this always to be a place where people can start with nothing and rise.”

On his support for Indiana’s voucher program, which provides government vouchers to low-income families to send their children to private school:

“(A)llowing low-income people to pick the school for their kid says they don’t need the government to tell them -- in fact it’s wrong for the government to tell them -- where their kid must go to school. Just because they don’t have a lot of money, doesn’t mean they aren’t able to make, and should be free to make, their own decisions.”

On his support for privatizing some government services and creating performance metrics for state agencies:

“Government is the last monopoly. Why don’t we Americans like monopolies? Because they overcharge and under-serve their customers…I always say you have to transplant accountability into government. In most of the world, it’s automatic: Your business does a bad job, you will lose sales, you will lose margins, you will lose market shares, your stock price will go down, whatever it is. The world measures you…

“The good news is government can shoot straight, and department after department in this administration has proven it. But it is not the natural order of things. If you just let the monopoly system – the old industrial ‘best employee is treated no differently than the worst employee’ system -- drift on, no one should be surprised that you get crummy results and a lot of wasted money.”