01/06/2011 03:06 pm ET | Updated May 25, 2011

What Now?

Now that Bill Daley is the new White House Chief of Staff, there are two directions relations between progressives and populists with the White House can go. And no, those directions are not worse and worser. But worse is definitely one of them.

Let me start by saying something that will surprise a lot of readers from this lefty populist: I actually like Bill Daley personally. I've known him for almost a quarter century, and he has always treated me with respect in spite of our many disagreements. He has a steady no-drama manner about him which makes it easy to understand why the President likes him. I think he is an effective manager. Now you would think a DC guy like myself who had warm feelings and a long and positive history with someone would be delighted that he just got the Chief of Staff position, but it is pretty hard to feel that way. I lobbied against Bill being the guy to get this job, and I encouraged my friends to lobby against him as well, for two reasons.

The first is optics: 35% of voters in the 2010 election said that Wall Street was primarily to blame for our economic class, more than any other entity or politician, but Democrats lost those economic populists 56-42. The big Wall Street banks are the single most hated institution in America. People already tend to think of Obama as being on the side of Wall Street -- they think he is a big government "Wall Street liberal" in EJ Dionne's classic phrase. Obama needs to show middle class voters he is on their side, and hiring a top exec at JP Morgan Chase as his Chief of Staff is not the way to get that done. It is a political mistake with both working class swing voters and base voters, both of whom strongly dislike the big bankers on Wall Street. This appointment was a classic "which side are you on" moment, but the side taken was not the right one.

The other reason I don't like the appointment is that I fear it is a sign that Obama is coming down firmly on the side of DC centrism, rather than where the country actually is. As I discussed right after the election, the exit polls and other post-election polls were completely clear that the swing voters who turned against the Democrats in 2010 were working and middle class populists: they don't like the big banks, they don't like TARP, they don't like the idea of "NAFTA-style trade deals," they hate outsourcing, they hate cuts in Social Security and Medicare. But the President seems to believe the views of these middle class voters, as well as his own base voters, don't matter much, and that the better political path is picking an Democratic establishment guy from Wall Street who led the fight in the Clinton administration for NAFTA. It's what I would call trickle down politics: make the DC establishment happy and hope their pleasure trickles down to everyone else.

Enough said on that, though. Bill Daley is the new Chief of Staff, and progressives aren't going to change that. The arguments of people like me did not carry the day. The question now is what happens next. If the White House soaks in the applause of the DC establishment and the business community, and decides they don't need to court those pesky working class voters or their base, I fear it will be a very long couple of years with a sound drubbing in November of 2012. If they turn away from populism at every point in order to court big business and the elites, this Presidency is in deep trouble. But if the White House is smart, they will realize that by appointing Daley, it is now incumbent on them to actually be far more aggressive in reaching out to progressives and populists. They could appoint a strong progressive populist as a senior White House staffer; they could announce sooner rather than later they will adamantly oppose Social Security, Medicare, and Medicaid cuts; they could empower Elizabeth Warren and give her a bigger role, and they could far more aggressively push the big banks to write down mortgages, since with Daley as Chief of Staff the presumption will be that the White House has become all pro-Wall Street, all of the time; they could send a clear signal that they aren't going to bow to hostage taking on the debt ceiling issue. If they did these kinds of things, progressives and those swing vote populists would not fear having Bill Daley as Chief of Staff.

Having appointed a Chief of Staff like Bill Daley, the President could take this opportunity to say to the progressives who aren't very happy today that he understands their disappointment, but still shares their values, and then go out and prove it. Or he can send a signal that he just doesn't care what they think. And Bill Daley himself could do Obama a great deal of good by sitting down with some leading progressive populists in the party and seeing if we can get to common ground. We'll see what path they take.