As Dish readers know, Indiana governor, Mitch Daniels, seems to me the kind of man the GOP desperately needs: a real fiscal conservative, socially inclusive, open to serious tax reform and politically adult conversation to regain the center ground. Here’s why the Dish loves him so:

Let’s raise the retirement age, he says. Let’s reduce Social Security for the rich. And let’s reconsider our military commitments, too. When I ask about taxes—in 2005 Daniels proposed a hike on the $100,000-plus crowd, which his own party promptly torpedoed—he refuses to revert to Republican talking points. “At some stage there could well be a tax increase,” he says with a sigh. “They say we can’t have grown-up conversations anymore. I think we can.”

David Brooks has hailed him as the “spiritual leader” of the new pragmatists in the GOP and the likeliest GOP nomineet in 2012. Ross Douthat likes him too, as Patrick noted here. Last Thursday he gave a speech that exemplified why he gives so many on the thinking right hope:

Daniels, once the Hudson Institute’s chief executive, described himself as an acolyte of [Herman] Kahn’s and marveled at the creative thinking evident in his 1982 book, “The Coming Boom.” Daniels recited from Kahn’s book: “It would be most useful to redesign the tax system to discourage consumption and encourage savings and investment. One obvious possibility is a value added tax and flat income tax, with the only exception being a lower standard deduction.”

But I’m not in denial about what the GOP now is – which is why I didn’t buy David Brooks’ prediction. Well, sadly, it appears I was right:

Indiana Gov. Mitch Daniels has now managed to alienate prominent social and fiscal conservatives. The potential presidential candidate’s already rocky path to the Republican nomination became more treacherous this weekend after the country’s most powerful anti-tax activist and one of the House’s most respected fiscal conservatives disparaged Daniels’ openness to considering a controversial value added tax as part of a larger tax system overhaul.

Sane fiscal conservatives know that some kind of VAT may well be essential if we are to get some kind of balanced budget in the future without jacking up income tax rates to the heavens. And taxing consumption is better in my view than taxing income. Still, the real point is that all this should be debatable, if conservatism is going to regenerate as a serious governing philosophy, rather than as a formula for media success. But here is Grover Norquist’s head exploding in response:

“This is outside the bounds of acceptable modern Republican thought, and it is only the zone of extremely left-wing Democrats who publicly talk about those things because all Democrats pretending to be moderates wouldn’t touch it with a 10-foot poll. Absent some explanation, such as large quantities of crystal meth, this is disqualifying. This is beyond the pale.”

Notice the formulation: that there are “boundaries of acceptable modern Republican thought.” Yes, this is a church or a party? And Norquist may not be the Pope (that would be Limbaugh) but he is in the college of cardinals). And notice the extreme rhetoric accusing Daniels of being on “crystal meth”. Daniels also spoke last week of a possible gas tax:

“One fully justifiable tax would be on imported oil.”

Daniels, in other words, represents both the hope of the GOP and the most damning evidence that right now, it’s hopeless.

(Photo: Shawn Thew/Getty.)