Katrina vanden Heuvel
Katrina vanden Heuvel
Opinion Writer

The ‘Democratic wing’ of the Democratic Party wakes up

What a difference a year makes. In 2012, Politico was reporting that Democrats had gone “AWOL in class war.” Occupy had come and gone by the spring. Mitt Romney’s Republican primary rivals were harsher on his “vulture capitalism” than President Obama was. Labor was under siege across the country. Liberals were focused on social issues like gay rights and abortion. The tea party had captured the (faux) populist mantle and was still riding high.

No longer. The tea party discredited itself with its government shutdown and threat of defaulting on American obligations. And the populist temper in the Democratic Party has been unleashed, once the president was safely reelected.

Katrina vanden Heuvel

Editor and publisher of the Nation magazine, vanden Heuvel writes a weekly column for The Post.

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Now the simmering tensions between what former Sen. Paul Wellstone called “the Democratic wing of the Democratic Party” and the Wall Street wing of that party have begun to boil. Populist Bill de Blasio is elected mayor of New York calling for raising taxes on the wealthy to pay for pre-K for every child. Bill Daley, early favorite in the Illinois race for governor, doesn’t make it out of the Democratic primary, as he is skewered as an ex-lobbyist for JPMorgan Chase. The New Republic puts rows of Sen. Elizabeth Warren’s face on its cover with the headline “Hillary’s nightmare.”

The differences between the two wings aren’t cosmetic or personal. They concern the basic direction of the party and the country. The battle is being driven by the harsh realities of this economy. Coming out of the Great Recession, the wealthiest few are capturing nearly all the rewards of growth, while most American families are struggling to stay afloat. The new majority forged by Obama — the “rising American electorate” of millennials, people of color, and single women — is struggling the most.

And now leaders of the “Democratic wing” are standing up, naming names and calling for a more equitable, just politics. After all, this extreme inequality isn’t an accident. It comes, as Warren put it, because entrenched interests have endeavored to rig the rules to work for them.

Many of the rigged rules derive directly from the Wall Street wing of the party, personified by Robert Rubin, former head of Goldman Sachs who served as Clinton’s economic guru and Treasury secretary. Rubin peddled the bankers’ creed: financial deregulation, fiscal austerity, capital gain tax cuts, corporate globalization, flexible (read anti-union) labor markets, combined with public solicitude for the poor, trumped always by limited budgets. Celebrated during the Clinton years, the combination proved a toxic brew that led directly to the financial wilding that blew up the economy.

Obama, while he campaigned with more than a touch of populism, surrounded himself with Rubin’s acolytes and sought, even amid the ruins of the economy, to revive the old mix. Now with the economy still scarred by mass unemployment and stagnant wages, a populist challenge is brewing. The first scalp belonged to Larry Summers, who had to withdraw his name from consideration as chair of the Federal Reserve. Sens. Sherrod Brown, Jeff Merkley and their progressive allies outside of Washington argued, successfully, that Summers had championed calamitous financial deregulation while serving under Rubin and shouldn’t be rewarded for that folly.

And the battles continue. Brown and Merkley, along with Warren and Sen. Bernie Sanders, have also called for breaking up the big banks and for holding bankers personally responsible for their often-illegal actions. Brown’s leadership of the drive to expand, rather than cut, Social Security benefits reflects a growing revolt against the austerity policies that have crippled the recovery. The Congressional Progressive Caucus has laid out a budget calling for investing in infrastructure, education, R&D and putting people to work while meeting vital needs. The caucus’s budget proves the country can afford these smart investments with sensible tax reforms that shut down overseas tax havens, tax Wall Street speculation and ensure that billionaires are no longer allowed to pay absurdly low rates.

Progressive Democrats are waging fights to raise the minimum wage at the local, state and national level, with the White House signaling it will join at the federal level. Labor unions have found success in growing protests by fast-food workers demanding decent wages.

The next brutal battle is likely to come over “fast-track” trade authority and the Trans-Pacific Partnership trade deal — dubbed “NAFTA on steroids” by the left. Negotiated in secret, with corporations at the table and Americans locked out, this “free trade accord” is consciously designed as an end run around domestic protections for the environment, consumers and workers.

For years, the Wall Street wing of the party has been able to cobble together enough votes from Republicans to pass corporate trade deals that have devastated U.S. workers. This time, however, what AFL-CIO Special Counsel Damon Silvers calls the “plutocratic center” may not hold. Sen. Warren’s fiery speech to the AFL-CIO convention sounded the bell:

“Wall Street, pharmaceuticals, telecom, big polluters and outsourcers are all salivating at the chance to rig upcoming trade deals in their favor . . . I’ve heard people actually say that [trade deals] have to be secret because if the American people knew what was going on, they would be opposed . . . I believe that if people would be opposed to a particular trade agreement, then that trade agreement should not happen.”

Washington’s premature prognosticators immediately translated the speech into pre-presidential speculation. With Hillary Clinton pocketing $400,000 from Goldman Sachs for two speeches, and Warren arguing that “The American people know the system is rigged against them and they want us to level the playing field,” the blogosphere is rife with calls for a Warren challenge. The new populism poses a real challenge, and if it succeeds, many politicians — quite possibly including Hillary Clinton — will join the parade rather than get broadsided by it.

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