Economic Populism at Heart of Emerging Debate Among Democrats

Published on Friday, July 11, 2014 by

Campaign for America's Future Blog

[Sen. Elizabeth Warren (D-MA), center, accompanied by Secretary of State Hillary Rodham Clinton, right, make statements introducing Senate Foreign Relations Chairman Sen. John Kerry (D-MA) seated at left, to the committee during his confirmation hearing to become secretary of state, replacing Clinton, Thursday, Jan. 24, 2013, on Capitol Hill in Washington. (AP Photo/J. Scott Applewhite)]

by Robert Borosage

Over at The Washington Post, the usually sensible Greg Sargent endorses the notion that divisions among Democrats are “mostly trumped up.” The tension between the Wall Street wing of the party and the Warren (as in Elizabeth) wing is an overblown fiction of a press corps desperate for some action.

It’s true that the prior divisions on social issues have dissipated, as liberals have swept the field. Obama’s halting attempts to wean the US from its foreign wars have garnered widespread support. And on economics, Sargent argues that Democrats “largely agree on the menu of policy responses to the economic problems faced by poor, working and middle class Americans — a higher minimum wage, universal pre-K, higher taxes on the wealthy to fund a stronger safety net, job creation and job training — whatever the broader rhetorical umbrella is being used.” Even Hillary says she agrees with Thomas Piketty that extreme inequality is a “threat” to our democracy.

There are differences on how aggressively to go after the big banks or whether to expand Social Security, Sargent admits, and a debate underway about “whether to push the Democratic Party in a more populist direction,” which he declines to define. But generally, he argues, there’s broad agreement that Hillary or any Democratic candidate will run on.

All of this is true except the conclusion. There is a broad agreement on what might be called a “populist lite” agenda — one that has been put forth repeatedly by Obama and frustrated by Republican obstruction. And the reforms — from the minimum wage to universal pre-K — are important and will make a difference.

But it strikes me as bizarre to suggest that there is no serious debate among Democrats when the National Education Association, the largest teachers union in the country and a key power in Democratic circles, has just called for the resignation of Obama’s education secretary. Democratic House and Senate leaders refuse to allow even a vote on fast-track trade authority sought by the president, and a majority of the Democratic caucus lines up against Obama’s Trans-Pacific Partnership negotiations. Progressives in both houses demand bold action on jobs, on taxing and investing that the president resists. Democrats revolt against the White House desire to trim Social Security benefits.

In fact, there is a fundamental debate brewing in the party, grounded on very different perspectives that lead in significantly different directions.

On one side are the passive voice populists, which include both Clintons and Obama. They argue that our Gilded Age inequality is the product of technology and globalization, as if these were autonomous forces like the weather. The effects — a declining middle class, stagnant wages, spreading misery — can be ameliorated by sensible policies, like the agenda Sargent ticks off. Most of all, Americans need to make certain the next generation gets better education and training so they can better compete in the global marketplace. Universal preschool is a first step to that. But the largest thrust — driven by the party’s deep pocket donors — is an assault on teacher’s unions and public schools, investment in charters, public and private, and a focus on high-stakes testing to measure teacher and school performance.

Undergirding this is an acceptance that we can’t really afford to do even the minimum in public education or child poverty, so the focus has to be on cheaper ways to make progress. This assumption also fuels the interest in cutting Social Security and Medicare benefits, experimenting with public-private partnerships to raise funds, and so on. All this assumes that we’re close to the limits on taxes, that corporate tax reform should be “revenue neutral,” (that is, companies should not contribute one dime more to our investment or budget needs), and that taxes on the wealthy can’t produce much additional revenue.

The activist-voice populists disagree fundamentally with both the analysis and the prescription. They argue that extreme inequality results from rules that were rigged to benefit the few and not the many. That leads to the demand for structural reforms to change the rules: fair and balanced trade and tax policies to replace those created by and for the multinationals; breaking up big banks and curbing Wall Street’s casino as opposed to accepting banks that are too big to fail and too big to save; progressive tax reforms to create revenue for the public investments that we need in everything from education to infrastructure to an expanded safety net; empowering workers and curbing CEO license to ensure workers share in the profits they help to produce; expanding Social Security and public pensions while moving further towards true universal, affordable health care.

These differences are only now emerging, as the failure of the recovery forces a bigger debate about our economy. The Wall Street wing presses forward with corporate trade deals that are opposed by a growing majority of voters. The bankers bear no accountability for their pervasive frauds and lawlessness, while most Americans are looking for perp walks. Well-heeled lobbies block any sensible tax reform, while polls show Americans strongly want the rich and the corporations to pay their fair share of taxes. Obama has already felt the revolt of the Democratic base against his plans to pare Social Security benefits. Clinton and Obama have been essentially AWOL in the war on labor and collective bargaining, essential elements of any strategy to rebuild the middle class.

Obviously, many of these questions pit the wealthy Wall Street and Silicon Valley donor class against the vast bulk of Democratic voters who are struggling in this economy. It’s not surprising that smart politicians have moved to adopt the populist lite agenda to appeal to the latter without offending the former.

But the divisions are likely to grow because most Americans are struggling in this economy. (Most still think it is in recession.) And with the deck still stacked against most Americans, little is likely to change without a new deal (to borrow a phrase).

And in addition to this is Hillary’s apparent intent to run to the right of Obama on foreign policy — to champion more interventionist and hawkish views at a time when Americans want to rebuild at home. If she pursues this course, it will likely spark a new debate around foreign policy that Obama’s relative caution largely avoided.

Democrats have always been a big-tent party. The divisions between Southern segregationists and Northern liberals were apparent. The battles over civil rights, women’s rights, choice, wars and gays and guns were fierce. Many of these debates now have largely dissipated as liberals have won and the party’s base has evolved. The New Dem scorn for traditional liberals and labor drove big primary fights.

But the new debates over economic direction and the likely battle over policing the world are just beginning to take shape. And if the economy continues to reward the few and not the many, the divisions won’t need to be trumped up.

[Robert L. Borosage is the founder and president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.]