elizabeth-warren-2011-10-4-21-30-11Centrist Democratic analysts Jim Kessler and Jonathon Cowlan raised the ire of progressive groups in early December when they posted an op-ed stating economic populism was a dead-end for the party.  Both analysis represent Third Way, a centrist Democratic think tank that has replaced the Democratic Leadership Council as the preeminent center-left think tank.  In the op-ed Kessler and Cowlan do not pull their punches.  They argue that the economic populism many modern-day progressive advocate is unsustainable even if the rich are taxed at higher rates.  They shoot shots across the bow of Senator Elizabeth Warren and NYC mayor de Blasio who they argue are the biggest proponents of this new liberal populism.

Unsurprisingly, many centrist Democrats and progressives did not react kindly to this op-ed.  Several Democrats who serve as honorary co-chariman of the think tank entered the fray though their comments were mainly aimed at defusing the ideological feud.  Progressives argue that Third Way is in the pocket of the wealthy and corporations.  This debate is not new to the party.  It has been playing out behind closed doors since 2012 when Obama played on populist policies to win reelection but has yet to implement them.  But now it is out in the open and this does not bode well for the party politically in the run up to 2014.

Democrats have professed unity ever since Obama has been in office.  Progressives, centrists, business friendly, establishment have all claimed support for the party’s policies and preferences and the direction it is headed.  But now, just as the GOP is struggling with, the Democratic Party is starting to debate which way to go.

Perhaps it might help to explain the two visions for the party characterized by Third Way and progressives.  Third Way’s vision can best be summed up in the first term of Obama and Hilary Clinton.  Business friendly Democrats that are liberal on the standard issues but centrist on business issues (think insurance companies continuing in Obamacare and no single-payer).  Many progressives favor the populism of Elizabeth Warren and de Blasio which stresses higher taxes on the wealthy, strengthening entitlement programs (in other words making them even more unaffordable) and a bevy of other social welfare programs being strengthened or created in the name of fighting income inequality.

It is notable that as Obama’s poll numbers have begun to tank he has increasingly turned to populism despite the fact his tenure has been anything but populist.  Obama’s bailing out of the banks strengthened to big to fail.  Obamacare only fed more wealth into the hands of the insurance companies (to the detriment of individuals and small business).  Lastly, Financial Reform only made entities like Fannie and Freddie continue to be largely unregulated.  Now Obama is turning to populist policies aimed at fighting inequality to boost his numbers with his leftist base which has tired of him.

Obama’s turn may or may not work.  Hilary has already made her possible campaign strategy clear.  Run as another transformative candidate that is center-left on fiscal issues but solidly liberal on the rest.  It has helped that the field remains clear for her.

The GOP’s debate over its direction is largely a mirror of the Democrats debate.  Should the GOP turn to the populist ideas of Rand Paul and Ted Cruz, find a middle ground between the two or turn more towards the center on social issues like Chris Christie has mentioned?  Of course GOP and Democratic versions of populism differ dramatically.  A GOP populism would mix in libertarian economic policies with socially conservative policies to spur growth and lower inequality.  Democratic populism would be sure to introduce a healthy new dose of the state into the mix (new regulations, rules, laws, agencies) to fight inequality.

While politically for Democrats this internal debate may not be good politically it is a healthy process for the party to partake in.  Much as the GOP is debating where it should go after Obama Democrats need to do the same.  Turn to the populist policies of Warren and de Blasio or the centrist, business friendly policies of Third Way and Clinton.  Whatever path they take will likely determine where their opposition goes as well.

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