What Divides Democrats
New York–area voters had the opportunity this fall to cast their ballot for one of two Democrats who are divided by more than the Hudson River. Cory Booker, the Newark mayor, whom New Jersey’s electors sent to the U.S. Senate in October, and Bill de Blasio, the Democratic nominee for mayor of New York City, personify two distinct futures for the Democratic Party.
Booker is a corporate Democrat—more precisely, a Wall Street and Silicon Valley Democrat—who praises the beneficent rich as sources of charitable giving and policy ideas that can lift the poor. De Blasio is an anti-corporate Democrat who condemns big business and the financial sector for using their wealth to rig the economy in their favor and at everyone else’s expense.
The divide between Booker and de Blasio matters because it defines the most fundamental fault line within the Democratic Party. Not so long ago, the Democrats generally agreed with one another on economics—hence the New Deal and Great Society—and fought with one another over foreign policy and the rights of minorities. Today, no national-security or social issue splits the party. Instead, economics now roils the Democrats. In 2016, the party’s presidential primaries will chiefly focus, as they have not in many decades, on the economic policy differences between candidates—that is, if there’s more than one candidate. If there’s only Hillary Clinton, her every economic utterance will be subjected to intense scrutiny.
The new Democratic comity on social issues culminates a 50-year transformation that began when Lyndon Johnson signed the Civil Rights Act. As Southern whites fled the party, Democrats welcomed socially liberal financial elites who had rejected the GOP’s rightward turn on racial and gender issues. This mix of Wall Street bankers and high-tech entrepreneurs has become a major source of Democratic funding. Their perspectives have dominated the party’s economic policies, beginning with former Goldman Sachs CEO Robert Rubin’s tenure as Bill Clinton’s Treasury secretary and continuing through the Obama presidency with such protégés as Lawrence Summers and Timothy Geithner. During Clinton’s presidency, Rubin et al. deregulated the financial industry and crafted free-trade accords that decimated American manufacturing. The dot-com boom and low unemployment levels of the late 1990s convinced the Rubinistas that they had found the key to generating good jobs in a nation that had been losing them for at least 25 years.
The crash of 2008 consigned the Rubin model of prosperity to the rubble. Nonetheless, his acolytes were installed in the key economic policy positions in the Obama administration, where they sought, with some success, to mitigate the wave of regulation that followed the financial panic. Their resistance to stricter oversight and the greater emphasis they placed on protecting banks than on protecting homeowners upset congressional liberals. Most progressives, though, were generally unwilling to go public with their criticism until after Barack Obama won re-election. That constraint removed, this summer they successfully blocked the president’s expected appointment of Summers to the chairmanship of the Federal Reserve.
These intraparty tensions will shape the contours of the 2016 presidential contest. Should Hillary Clinton seek the party’s nomination, she will have to decide whether, or to what extent, she should break with the economic policies and policymakers that held sway in her husband’s and Obama’s administrations. If she chooses not to run, the fight for the nomination will likely feature candidates identified either with the more populist and regulatory side of the party (Senator Elizabeth Warren of Massachusetts, say) or with its more centrist and corporate side (Governor Andrew Cuomo of New York, say). Whatever occurs, Wall Street’s role in the Democratic Party—a fait accompli for the past two decades, albeit one that Democrats seldom advertised—will be up for debate.
The Democrats’ remarkable accord on social issues is the result of a no less remarkable sea change in the party’s membership. The nation’s fastest-growing demographic groups—Latinos, Asians, and millennials—have swelled the party’s rolls and infused them with their own liberal viewpoints. At the same time, the shift of older white voters, particularly in the South and rural America, from the Democratic column to the Republican has effectively eliminated social conservatives from the party’s membership. Today, only one Democratic congressman, Georgia’s John Barrow, comes from a majority-white district in the five states of the Deep South.
Accordingly, the social issues that Republicans once used as wedges against the Democrats and that divided the Democrats—gay marriage, legalization of undocumented immigrants, access to abortion—have become not just the lingua franca of the party but issues that Democrats now use as wedges against Republicans. What’s more, as the South experiences its own demographic shifts, the social liberalism of blue-state Democrats is becoming the social liberalism of purple-state Democrats, too. In this autumn’s contest for the Virginia governorship, Democrat Terry McAuliffe has backed universal background checks for handguns, gay marriage, citizenship for undocumented immigrants, and an assault-weapons ban. McAuliffe has never been mistaken for a progressive ideologue. His support for these positions, rather, is a clear sign of how much Virginia has changed. As Ronald Brownstein has reported in the National Journal, multiracial Northern Virginia has seen its population grow to compose 30 percent of the state’s electorate, while the poorer, heavily white Appalachian counties in the state’s southwest region have shrunk to less than 10 percent of the state’s voters. This has encouraged McAuliffe to take stances the state’s two Democratic senators, Mark Warner and Tim Kaine, shunned in their earlier runs for office but now endorse.
The Democrats do have their differences on national-security issues, but they pale alongside the foreign-policy divisions that racked the party for decades. Liberals and civil libertarians have criticized the Obama administration’s use of drone strikes and the scope of its electronic surveillance practices. These discontents, however, show no sign of producing either a protest movement or an insurgent candidate. The wars that could produce dissent on a large scale have either ended, in the case of Iraq, or are being wound down, in the case of Afghanistan. Save among select policy elites, no significant agitation exists within the party—or without—to involve the nation more deeply in the Syrian civil war. Indeed, there’s widespread agreement that bolstering America’s national security requires the creation of a more vibrant economy. It’s around this question—how the economy is to be strengthened—that the Democrats divide.
Democrats agree on what could be termed a basic economic program: raising taxes on the rich, increasing the minimum wage, investing more in infrastructure and education, extending health coverage through the Affordable Care Act. But at the state and, even more, the municipal level, they have substantial differences over the role of unions, the future of public education, and the privatization of services. The differences between Cory Booker and Bill de Blasio illustrate just how wide these gaps have grown.
Booker spent most of his tenure as mayor of Newark enlisting the financial support and embracing the political perspective of the corporate sector. Governing an impoverished city like Newark, Booker has argued, presented him with few alternatives to the course he’s taken. No Democrat can take issue with the way he’s highlighted the plight of the poor—living in public-housing projects for more than seven years, subsisting on a food-stamp budget for a week. But Booker has journeyed to the outer extremes of education policy, calling for an end to teacher tenure and endorsing vouchers for private schools. Famously, he raised $100 million from Facebook founder Mark Zuckerberg for his education programs. Booker himself has been on the receiving end of rich folks’ largesse. As The New York Times reported in August, Google Executive Chairman Eric Schmidt and other Silicon Valley heavyweights staked Booker to an investment, at the time worth an estimated $1 million to $5 million, in a social media start-up (which, since the Times story broke, Booker has sold).
Even allowing for both his city’s and his own dependence on the kindness of the rich, it was nonetheless stunning when Booker told viewers of Meet the Press in the midst of the 2012 campaign that he found the Obama re-election campaign’s attacks on Mitt Romney and Bain Capital “nauseating.” “Enough is enough,” he said. “Stop attacking private equity.” Booker’s vision of the forces for progressive social change apparently includes the very poor and the very rich—the former as recipients, the latter as dispensaries, of private wealth. Any mayor of a city like Newark is surely entitled to adhere to the adage that beggars can’t be choosers. But at a time when the financial sector has brought the broader economy to ruin and profits have soared in large part due to capital’s suppression of wages, Booker’s comments and the sensibility they betrayed could not have been more at odds with the beliefs of millions of Democrats, particularly with those Democrats whom de Blasio has come to represent.
After running fourth for many months among the candidates in New York’s Democratic primary, de Blasio surged to the top by campaigning, essentially, against policies that coddled the plutocratic class. New York, de Blasio reiterated at every stop along the campaign trail, had become a tale of two cities, a Bloombergian version of Fritz Lang’s Metropolis where nearly half the residents live in or near poverty while the super-rich swan as never before. De Blasio advocated raises for the city’s unionized workers and spoke in favor of fast-food workers’ campaign to win a living wage. He excoriated Mayor Michael Bloomberg and the Democratic mayoral candidate closest to him, City Council Speaker Christine Quinn, for blocking for three years a bill entitling workers to paid sick days. He deplored giveaways to developers and corporations and called for linking new development to the construction of affordable housing. He campaigned against the stop-and-frisk-minority-young-men policy of the police. He suggested that he’d discontinue the city’s practice of letting charter schools set up shop rent-free in city-owned facilities. He called repeatedly for higher taxes on the rich to fund universal preschool.
The policies that de Blasio has pledged to pursue run counter not only to many of Booker’s but also to those of numerous other Democratic mayors, including Chicago’s Rahm Emanuel and Los Angeles’s Antonio Villaraigosa (whose eight years in office ended in June), both of whom have promoted charter schools and fought with their city’s unions. The fiercest intraparty battles over economic issues today are fought in city halls. In the past year, both Boston and Los Angeles have gone through Democrat-versus-Democrat mayoral runoff elections in which one candidate accused the other of being the tool of public-employee unions.
The role of finance within the Democratic Party was not an issue in the last two presidential election cycles, but it will be in the next, posing a challenge for Hillary Clinton if she chooses to run. As one former Clinton administration official says, “She’s too enmeshed in the entire machinery” of the Rubin school of economics to distance herself credibly from it.
But is she? If the battle between the advocates of Janet Yellen and Larry Summers was round one of the Democrats’ fight over the fate of Wall Street liberalism, what do we make of the Clintons’ role in it? Hillary had no reason to take sides and ample reason not to—and she didn’t. Bill issued a public defense of Summers but only after he had withdrawn his name from consideration. The Clintons have usually been able to sense the direction of the prevailing winds.
Indeed, the Summers-Yellen battle should have put Hillary Clinton on notice that she’s more likely to estrange key constituencies if she maintains her historic link to Rubinomics. Should she take her economic counsel chiefly from second- and third-generation Rubin apostles like Gene Sperling and Jason Furman, a number of key Democratic elites—labor leaders, the blogosphere, progressive members of Congress—would likely erupt.
At one level, the choice between old loyalties and new necessities should be one that Clinton can finesse. She has already won Wall Street’s trust, and if she remains the prohibitive favorite, she will command a share of the financial sector’s allegiance no matter whom she selects for her economic team. On a deeper level, however, Clinton will be under political pressure to chart some new directions in economic policy.
This challenge isn’t Clinton’s alone. While the Republican Party’s responsibility for blocking economic recovery measures should be clear to millions of voters, the Democrats will nonetheless come before an electorate in 2016 that will be worse off economically than it was in 2008. Democratic voters will likely be looking to their presidential candidate for some new remedies. Offering the same menu of policies that the Democrats have offered for the past eight years—worse yet, with the same stable of economic advisers—hardly sounds like a recipe for success.
Senator Sherrod Brown of Ohio, who initiated the letter from Democratic senators recommending Yellen to Obama, believes that Clinton understands the perils of embodying the ancien régime. “I don’t think Hillary will be a Rubin acolyte,” he says. “The Yellen fight showed that the emphasis on increasing employment has become central to the Democratic mainstream. I don’t see us going back to the light regulation and deregulation of the ’90s.”
The constituencies now swelling the Democrats’ ranks, Latinos and millennials in particular, have created the space—indeed, the necessity—for the party to move to the left. Polled by the Pew Research Center in 2012 as to whether they would “rather have a smaller government providing fewer services or bigger government providing more services,” Latinos preferred the bigger-government option by 75 percent to 19 percent. Millennials present the Democrats with an opportunity as well as a challenge: Addressing the profound economic travails of the young will require the Democrats to go far beyond the halfway-house measures of recent decades. They will need to reinvent direct public employment programs, devise new plans to make college affordable, substantially raise the minimum wage, and give workers the right to form unions without fear of being fired. In short, a successful Democratic presidential candidate will have to call for some substantial, though targeted, expansions in the role of government. While Hillary Clinton doesn’t have to explicitly repudiate her husband’s declaration that “the era of big government is over,” her road—any Democrat’s road—to the White House runs to the left of the roads that Bill Clinton and Barack Obama traversed.
Should Hillary opt not to run, the potential candidate who would most clearly represent the party’s economic left in the 2016 contest is Elizabeth Warren, the bane of Wall Street, who conceived the Consumer Financial Protection Bureau and advocates a range of pro-labor reforms. The Massachusetts senator disavows any interest in becoming a candidate, but many liberals would expect and urge Warren to enter the race, even though her political identity and career experience do not extend much beyond financial issues. If she declines, it’s not apparent who would take up the progressive-populist banner (though Governor Martin O’Malley of Maryland appears eager to put himself forward). This would be one of those vacuums, however, that political nature abhors. After all, few foresaw the emergence of Gary Hart or Barack Obama in the years leading up to their presidential campaigns.
Even if the primaries end up pitting a progressive like Warren against a centrist like Andrew Cuomo (who has been cool to raising both his state’s minimum wage and taxes on its wealthy), the candidates will likely agree on a wide range of economic policies. But a left candidate would also likely favor reining in or breaking up the biggest banks and oppose trade deals that reduce domestic wages.
Whatever the outcome of the presidential primary battles, Congress will also be an arena in which the Democrats’ conflicting positions will be fought out. On Capitol Hill, the battle between the deficit hawks and those who favor increasing public investment has been sidetracked by the Republicans’ opposition to what is the Democrats’ near-consensual insistence on raising taxes on the rich. But should Republicans lose their House majority, the corporate and financial establishment will mount a massive campaign to scale back Social Security and Medicare as part of their much-beloved “grand bargain.” This bargain, they claim, will mark a triumph of moderation, unifying fiscal conservatism with social liberalism—in other words, codifying Cory Booker’s politics.
If a Democrat succeeds Obama, she or he will come under immense pressure, as Obama has, to reduce spending on social welfare. The president’s ability to resist such pressure will depend in part on the strength not just of a left--economic tendency in the party but a left-economic movement in the country. The mere existence of a more progressive electorate will not be—nor has it ever been—enough to achieve major social and economic reform. Absent a contemporary version of the mass left movements that prodded their government to enact the landmark legislation of the New Deal and Great Society, the Wall Street liberals, and non-liberals, will probably be able to block the investment of federal funds on the scale required to reboot the economy. They may even be able to further diminish America’s already diminished welfare state.
Some of the ingredients for a movement are in place. Awareness of and indignation toward the growth of economic inequality and the shrinking of the middle class continue to rise. But, the campaign of fast-food workers for higher wages notwithstanding, the kind of movement that could strengthen the economic left within the Democratic Party is nowhere yet in evidence. Like the country at large, the Democrats have changed. They’re more wary of finance; they want government to make college more affordable and jobs more numerous and better paying. But the balance of power in the party and in the nation haven’t shifted enough for those desires to become law—not unless the people whom Bill de Blasio champions amass in numbers sufficient to overcome the interests that Cory Booker protects.
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