So it's probably for the best that he has decided not to run. Jeff Goldstein over at Protein Wisdom explains why better than I can: (emphasis mine)
The truth is, at some other moment in time, Daniels may have made a good GOP candidate. But this is an election where, win or lose, conservatives have to make their case and present a clear, unambiguous, and unapologetic defense of liberty, individualism, free market capitalism, natural rights, and the rule of law proceeding from the Constitution. Whether you like Daniels or not — and many swear by him — it is clear that his particular worldview is that conservatives must bracket social and “wedge” issues; strain to be liked (as opposed to merely being likeable); and bend over backwards to understand and in some ways accommodate the opposition.
This was the same counsel we received by a cowed GOP establishment in 2008 after McCain, who ran just such a campaign, was soundly whipped. And it’s the same advice being repeated back to us — by mostly those same people — that we’re to heed now that the 2012 election season is in its infancy, lest we be marginalized as extremists and rhetorical Visigoths.
No offense, “pragmatists.” But pound sand. We need to wake Americans up and give them a definitive choice. Those who would tell us the era of Reagan is over — that conservatism / classical liberalism itself needs be re-imagined as a sort of big government, low-tax “compassionate” nannystate — are not among those opinions we should bother with.