Indiana, a state with a Republican House, Senate, Governorship, and DECADES with a Republican Superintendent of Education has the highest high school dropout rate in the nation. According to a columnist in the New York Times today, high dropout rates are not such a problem among white teenage boys as among African American and Hispanic youths, so one suspects that Indiana's problems in addressing issues of race and class contribute its high dropout rates.
Perhaps this is an area in which the Democratic Party can be making hay. (The Party would first need to spend some time in a huddle, for if it has offered any serious solutions in the past, those solutions appear to have lacked focus, voice, or publicity.) Whatever, Indiana has such problems that we can't even claim to be mediocre.... it would take improvement to claim that.
In my opinion, Daniels' importance as a candidate and governor has been his seriousness in taking on some strategic issues that have impeded Indiana's economic development. The administration has had its problems (FSSA for instance...) which can be the basis of legitimate criticism. But Daniels has been attacking core issues of time zone, transportation infrastructure, and business promotion, without all of which, I suspect we would not have gotten the Honda deal or the expansion of the shipping hub in Indianapolis.
Indiana's best interests depend on the Democratic Party pursuing matters of serious government, not in becoming House Republican Caucus Lite by playing to and indulging Indiana's most backward and xenophobic instincts. By all means, criticize the Governor's administration on obvious shortcomings, fair and appropriate always, but seek areas of genuine Hoosier decay, and run on serious proposed solutions. THEN moderates and business will see some advantage to Democratic legislative control, beyond just stopping the idiocy of conservative Republicanism. THEN there would be valuable legislative programs to pursue and realize, and the foundation for some pride as a Party.