05/16/2014 09:16 am ET Updated Jul 16, 2014

Elizabeth Warren: Saving the Democrats

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Reading Senator Elizabeth Warren's new book, A Fighting Chance, I thought about the parallels between her career and that of Barack Obama. Both are brilliant lawyers with inspiring personal stories. Both entered national politics running for the senate and gave well-received speeches at the Democratic National convention. But Obama represents a continuation of Clinton-era "third way" policies. Warren offers a strident new populism.

To be fair, Obama first ran for President on a promise to end the Iraq war. He didn't paint himself as a populist and many Democrats recognized that he was not a liberal. And when he started his initial presidential campaign, few recognized that his biggest challenge would be the Great Recession. In 2008, at a San Francisco fundraiser, I asked candidate Obama how we could distinguish his economic policies from those of Hillary Clinton. He quipped, "We talk to the same people."

Obama and Elizabeth Warren have both lived through hard times, but Warren made the plight of the middle class the focus of her career. In 1981, Warren began teaching bankruptcy law at the University of Texas School of Law. She studied why millions of Americans annually file for bankruptcy and wrote a landmark study, "As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America," with Teresa Sullivan and Jay Westbrook.

Elizabeth Warren had an epiphany. She realized the US is turning into a plutocracy where the wealthy and powerful benefit at the expense of working Americans:

Big corporations hire armies of lobbyists to get billion-dollar loopholes into the tax system and persuade their friends in Congress to support laws that keep the playing field tilted in the their favor. Meanwhile, hardworking families are told that they'll just have to live with smaller dreams for their children.

Before he went to law school, Barack Obama worked as a community organizer. As a professional he worked as a civil rights attorney and taught constitutional law. In contrast, Elizabeth Warren was a Harvard Law School professor teaching bankruptcy law and consumer credit - twice honored as teacher of the year. Both Obama and Warren are Democrats, but Warren understands the forces that have destroyed America's middle class far better than does Obama. As a result, she has a better grasp of populist principles.

University of California Economics Professor Robert Reich recently identified six principles of the new populism:

1. Cut the biggest Wall Street banks down to a size where they're no longer too big to fail. Elizabeth Warrens' book makes it clear that she's no fan of big banks. She's particularly critical of the 2008 bank bailout (TARP): "The major banks didn't need to be so big and interconnected... And the government made a huge mistake in how they handled the bailout."

2. Resurrect the Glass-Steagall Act, the law separating investment from commercial banking thereby preventing companies from gambling with their depositors' money. Senator Warren has introduced legislation to bring back critical elements of Glass-Steagall.

3. End corporate welfare including subsidies to big oil, agribusiness, pharmaceuticals, and Wall Street. Warren seeks changes that force corporations to play by the same rules as the working class.

4. Stop the National Security Agency from spying on Americans. Senator Warren said, "Congress must go further to protect the right to privacy, to end the NSA's dragnet surveillance of ordinary Americans, to make the intelligence community more transparent and accountable."

5. Scale back American interventions overseas. Elizabeth Warren wants to withdraw US troops from Afghanistan. In a recent speech Warren observed, "The failure to make civilian casualties a full and robust part of our national conversation over the use of force is dangerous - dangerous because of the impression that it gives the world about our country and dangerous because of how it affects the decisions that we make as a country."

6. Oppose trade agreements crafted by big corporations. Senator Warren has led the fight against the Trans Pacific Partnership, particularly the Administrations refusal to reveal the text of the agreement.

It's clear that Elizabeth Warren is much more of a populist than is Barack Obama (or Hillary Clinton). That's because she's retained her independence.

In "A Fighting Chance," Elizabeth Warren recounts a spring 2009 conversation with Larry Summers then President Obama's most senior economic adviser:

[Summers said] I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas... But insiders also understand one unbreakable rule: They don't criticize other insiders.

Elizabeth Warren decided to be an outsider. Barack Obama is an insider. (So is Hillary Clinton.)

Because Elizabeth Warren continues to be an outsider, continues to represent the best interests of the middle class, she's a populist. Warren may not run for President in 2016 - she's said that she does not intend to do so - but she should become the spiritual leader of the Democratic Party.