Democrats are going back to their liberal populist roots, ensuring that the clash against laissez faire Republicans will only get louder and fiercer in the months ahead.
Hardcore progressives appear to be gaining momentum inside Democratic circles, while the centrist movement sparked by Bill Clinton’s ascension to the White House in 1992 seems to be fading. It’s a natural outgrowth of a sluggish economy recovery, decades of flat wages, and the ideological hardening of a GOP base unwilling to compromise on its ideals – even if it might mean another government shutdown.
Freshman Sen. Elizabeth Warren (D-MA), a former Harvard Law professor and champion of consumer rights, has led the charge on making banks that are “too big to fail” extinct. Sen. Sherrod Brown (D-OH) recently circulated a letter calling on President Obama to elevate Federal Reserve vice chairwoman Janet Yellen to the central bank’s top post, instead of West Wing favorite Larry Summers, a former Clinton-era Treasury secretary with ties to Wall Street.
Obama, himself, has adopted populist rhetoric after pursuing economic and budgetary policies in his first term that enraged many on the left. In a series of economic speeches over the past two weeks, he has hammered home the need to raise the minimum wage and spend $50 billion on infrastructure. The president has stopped mentioning the importance of reforming entitlement programs such as Social Security and Medicare—once a necessary piece of reaching any budget deal with congressional Republicans.
His top agenda item is now fixing income inequality.
“Even before the financial crisis hit, we were going through a decade where a few at the top were doing better and better, but most families were working harder and harder just to get by,” Obama said Tuesday in Chattanooga. “And reversing that trend should be Washington’s highest priority. It’s my highest priority.”
Many Senate Democrats applauded the shift in focus, saying that the inequality issue is what unites the party. “He’s focusing on what he’s going to do on everything from tax reform to jobs and job creation,” Brown told The Fiscal Times Wednesday, after the president met with Democrats on Capitol Hill. “He’s saying the right things, and I’m excited about it. It’s a message the country wants to hear.”
“He is really focused on moving forward with the economy, with a focus on growth and jobs,” added Sen. Amy Klobuchar, a liberal Democrat from Minnesota.
Others have noticed the conspicuous absence of entitlement reform in Obama’s speeches. Until recently, the White House had talked up the importance of using chained CPI — a less generous measure of inflation than the existing system—to determine Social Security payments. This olive branch to Republicans designed to help reduce future budget deficits only provoked an uproar from Democrats such as Iowa Sen. Tom Harkin.
Earlier this month, a coalition of progressive groups launched an initiative in support of a pair of Senate bills—one of which Harkin has sponsored—that would increase Social Security benefits.
“Democrats and progressives are merely just following where voters are,” said Neil Sroka, a spokesman for Democracy For America, one of the groups behind the push. “That’s why the president is no longer talking about cutting these programs, because he knows he is on the wrong side of the American people.”
This is not an entirely comfortable transition for a party that until recently was defined by Bill Clinton’s tack to the center to win the presidency in 1992 and 1996.
Entitlement programs are a long-term threat to the federal balance sheet and are projected to cause the national debt to explode after 2023 to levels that could choke off growth. Government trustees estimate that Medicare’s hospital insurance fund will be insolvent by 2026, while Social Security will be grappling with the same problem in 2033.
These two programs are a source of schism inside a party that must deliver on a populist message that increasingly resonates with its base, without reinforcing the worst of stereotypes about Democrats favoring reckless government spending.
Senate Majority Whip Dick Durbin (D-IL) told The Fiscal Times that, “within our caucus there are those who don’t want to touch either of these programs.”
“I know it divides our caucus,” Durbin said. “But I think we have a responsibility to try to find some way to give Social Security and Medicare solvency and longevity. And just to put it in political terms, it makes a lot more sense to do it with a Democratic president than waiting for the next president.”
The populist message increasingly resonates with voters, just as Republicans won a majority in the House in 2010 by insisting that government expenditures must be slashed, Obamacare abandoned, and tax rates cut. The Tea Party conservatives who now dominate the House opposed a fiscal cliff compromise and emergency Eastern Seaboard storm relief earlier this year, revealing a venomous split inside the GOP between lawmakers who value pragmatism and those who believe in ideological purity.
Warren won her Massachusetts Senate seat last year by explicitly defending the role government plays in enabling prosperity, noting the value created by constructing roads and investing in schools. Her win over Republican incumbent Scott Brown helped to embolden progressives on Capitol Hill.
Two major economic factors have also fueled the return of populism for Democrats and their progressive allies.
For starters, the recovery from the 2008 financial meltdown has been uneven. The economy grew at a dismal 1.4 percent clip for the first half of the year, the Bureau of Economic Analysis reported on Wednesday. Housing prices and the stock market are climbing back up, but wages have tumbled for much of the country.
From 2009 to 2011, the wealthiest one percent saw their incomes grow by 11.2 percent, while incomes shrunk by 0.4 percent for the other 99 percent of the country, according to analysis released earlier this year by University of California-Berkley economist Emmanuel Saez.
Focus group data released this month by the progressive Democracy Corps show that Americans increasingly view the economy with a mixture of fear and anger.
Among the major trends identified: People believe they can’t “live off” the new jobs being created because the wages are too low, and they face new expenses with student loans and childcare that previous generations did not. It’s an environment in which Social Security checks no longer supplement a retirement but are the predominant source of cash.
“[T]hese trends have given way to something new altogether that will require a big national reckoning,” Democracy Corps concluded in a report. “Now, working people are beginning to see this squeeze as something permanent, rooted in the character of jobs. The way they live, plan for the future, and talk about finances has shifted. They have permanently downsized their expectations for what they get from the economy.”
Secondly, deficit pressures have been temporarily relieved, making it easier for Democrats and their Senate allies to advocate for more spending. The White House estimated this month that the annual deficit will be $759 billion, about $214 billion lower than projected earlier this year. Republicans can no longer bemoan a deficit that recently topped $1.4 trillion.
This has enabled a move toward more populist economic goals that could define the upcoming debate on lifting the $16.7 trillion debt ceiling and approving a fiscal 2014 budget.
“We have cut the deficit in half,” said Sen. Bernie Sanders (I-VT), a leading progressive who caucuses with the Democrats. “Put that on the front pages of the paper. That’s not insignificant. Let’s talk about unemployment among youth at 20 percent in this country. What about that? So I think we have paid a lot of attention to deficit reduction. We’ve made good success. We’ve got to continue doing it. But now the focus has to be creating millions of jobs.”