My fourth-favorite Administration appointee (after Rummy, Condi, and Wolfie) left this week to pursue a run for governor in Indiana. It might seem strange to be elevating Daniels in this way, given the shellackings he's received from the Left and Right ends of the blogosphere. I myself have always been something of a Daniels fan. Anyone who earns the undying enmity of Congressional appropriators and even has the balls to question post-911 spending excess can't be all that bad in my book.

Unfortunately, it could fairly be said that the particular demands of wartime did not allow Daniels to shine or take as prominent a role as he otherwise would in peacetime. (Rumsfeld had much the same problem before 9/11, if you remember all the leakage about his feuding with the brass over military transformation.) The countervailing demands of war and homeland security admittedly knocked spending several notches down on the enemies list in fiscal years '02 and '03. But as Edward Boyd points out, things are starting to improve even on this front.

The wartime period did do Daniels one favor. It enabled him to push through geeky management reforms and performance-based budgeting that would have otherwise elicited a hue-and-cry from Democrats and cushy career-types in a non-war period. Under Daniels, the OMB began the process of outsourcing up to 850,000 government jobs. While not as sexy as what many hard-core conservatives are demanding, Daniels has been more successful than any OMB director in recent history in fulfilling their long-stated desire to run the government more "like a business."

If you're trying to figure out where the Administration is going on this whole size of government thing, my take is the following. The late Clinton years showed the tendency of economic trends to overwhelm virtually anything in their path. As a result, we had effortless surpluses that flowed as easily as black gold does into Saudi royal bank accounts. But instead of reinvesting the surplus back into the private economy in the form of tax relief to individuals, President If-You-Don't-Spend-It-Right squandered it on lavish domestic spending.

Looking back through history, the biggest absolute changes in the size and scope of government don't occur low-spending-growth, low-revenue growth periods (like now, minus the war). They occur in periods like the late '90s when nobody's looking and nobody cares about double-digit spending increases, and in periods of wartime. Much to the chagrin of budget hawks, we have just had two such periods run up against one another.

What's the goal that animates Bush in this environment? It's not government shrinkage so much as private-sector enlargement — a repeat of the '80s and '90s without the spending growth. If the private sector grows, then government's share of it shrinks by default, if you have the warewithall to control spending. And Bush is trying to build a powerful incentive against overspending with an agenda of permanent tax relief, not one-off cuts whose effect on the real rate of taxation is nullified within a decade. It's a longer game than either of the last two years would suggest, and it's already got the "mixed economy" Left wetting its pants.