THE BLOG
01/07/2015 05:51 pm ET Updated Mar 09, 2015

Elizabeth Warren and the Four Corners of American Politics

Bloomberg via Getty Images

The last couple of days have been a provocative view of the near-term future of American politics. There are four major teams on the scene at the same time, coming from four different corners of the field, and they all have some amount of political juice. How they end up interacting and competing with each other will be the driving political story for quite a while into the future.

On the Republican side, there is the increasingly conservative -- but apparently never extreme enough -- establishment wing of the party led by Boehner and McConnell and the big business lobby, and there is the Tea Party anti-establishment wing. The establishment guys, pretty much all guys, have the upper hand for now but clearly got a little surprised by the strength of the anti-Boehner rebellion in the Speaker election. Knowing the strength of the Tea Party gang in primary election fights, they are a force to be reckoned with for the foreseeable future -- as evidenced by the fact that the Republican Party's establishment has moved so far to the right on most issues in the last five years. The establishment team certainly has embraced the Ayn Rand worldview so popular with the tea partiers, as evidenced by how on day one, they passed a rule that will probably result in cutting benefits and stealing from the disabled.

The biggest policy difference between the two wings of the Republicans is that the establishment wing invariably does whatever the big business lobby want them to do, even if it violates small government and free market principles -- note how the Wall Street provision snuck into December's budget bill that caused all the trouble allows more bailouts of the biggest banks' riskiest bets -- which isn't exactly Adam Smith's idea of free market economics. Tea Party types have been railing against these kinds of Wall Street bank bailouts since the last round of them in 2008. The biggest political difference is that the establishment will go along with the company line when push comes to shove, while the Tea Party still doesn't mind-blowing up Congress to get what they want.

The two wings of the Democratic Party are similarly the insiders and the populists. The difference between these two corners of the party was of course, also on display in the blow-up over the budget bill with that nasty Wall St bailout. However, there are more ugly policy fights coming soon with the Trans-Pacific Partnership trade deal/abomination being at the top of the list, and the Antonio Weiss nomination fight also in the queue.

The philosophical and message differences between the two wings of the party were also on stark display today at the AFL-CIO's Raising Wages Summit.

Representing the establishment point of view was Obama's Secretary of Labor, Tom Perez. I should just say at the outset of this discussion that Perez is actually a strong progressive and great friend of labor, in my view the best of Obama's Cabinet Secretaries, and he certainly gave a good speech extolling progressive values on jobs and wages. But because he does represent the administration, the message he gave was an establishment message: that because of Obama's great economic policies, the macro-economy is getting a lot better and things are looking up. He acknowledged that there was "progress yet to be made," but made the case that the economy is recovering strongly because of Obama's leadership.

Representing the populist progressive wing of the party was Elizabeth Warren, and while she gave props to the president's leadership on economic issues for the good things that are happening, she cast a starker picture for the bottom 90 percent of Americans income-wise:

Think about it this way: The stock market is soaring, and that's great if you have a pension or money in a mutual fund. But if you and your husband or wife are both working full-time, with kids in school, and you are among the half or so of all Americans who don't have any money in stocks,(ii) how does a booming stock market help you?

Corporate profits (iii) and GDP are up. But if you work at Walmart, and you are paid so little that you still need food stamps to put groceries on the table, what does more money in stockholders' pockets and an uptick in GDP do for you?

Unemployment numbers are dropping. But if you've got a part-time job and still can't find full-time work -- or if you've just given up because you can't find a good job to replace the one you had -- you are counted as part of that drop in unemployment,(iv) but how much is your economic situation improving?

Inflation rates are still low. But if you are young and starting out life with tens of thousands of dollars in student loan debt locked into high interest rates by Congress, unable to find a good job or save to buy a house, how are you benefiting from low inflation?

A lot of broad national economic statistics say our economy is getting better, and it is true that the economy overall is recovering from the terrible crash of 2008. But there have been deep structural changes in this economy, changes that have gone on for more than thirty years, changes that have cut out hard-working, middle class families from sharing in this overall growth.

The speech, though, did not paint a picture of doom and gloom, or woe is me. It told the story of an America that worked well for most workers for 45 years in the wake of the New Deal and Great Society policies that lifted most people up: Social Security, Medicare, Medicaid, effective regulation and back-up of the banking system, a strong system of anti-trust enforcement, minimum wage, strong labor laws, the GI Bill and better student loan/grant policies, investment in infrastructure and education and R&D. That era of American history was by far the most prosperous for by far the most people than any era in our history by far. And Warren did not just talk history, she projected an optimistic message that even in the face of special interest we can bring these kinds of policies back:

We need to talk about how to build a future. So let's say what we believe:

  • We believe in making investments -- in roads and bridges and power grids, in education, in research -- investments that create good jobs in the short run and help us build new opportunities over the long run.
  • And we believe in paying for them-not with magical accounting scams that pretend to cut taxes and raise revenue, but with real, honest-to-goodness changes that make sure that we pay-and corporations pay-a fair share to build a future for all of us.
  • We believe in trade policies and tax codes that will strengthen our economy, raise our living standards, and create American jobs -- and we will never give up on those three words: Made in America.

And one more point. If we're ever going to un-rig the system, then we need to make some important political changes. And here's where we start:

  • We know that democracy doesn't work when congressmen and regulators bow down to Wall Street's political power -- and that means it's time to break up the Wall Street banks and remind politicians that they don't work for the big banks, they work for US!

Changes like this aren't easy. But we know they are possible. We know they are possible because we have seen David beat Goliath before. We have seen lobbyists lose. We've seen it all through our history. We saw it when we created the new Consumer Financial Protection Bureau, when we passed health care reform. We saw it when President Obama took important steps to try and reform our immigration system through executive order just weeks ago. Change is difficult, but it is possible.

This contrast of messages will be central to the Democratic debate between now and the next election. Democrats have to figure out the right balance -- we shouldn't walk away from the things a Democratic President and Congress accomplished when they were in power or the fact that Obama inherited a country in the deepest economic crisis since the Great Depression and helped bring about a growing economy again, but for us to say things are swell isn't going to work when so many people aren't getting raises, can't afford to retire, are too deep in debt, and are feeling more and more economically squeezed. I think the way Warren handled that balancing act worked far better message wise than the Obama-oriented message, and even more importantly, I think she is right on the substance: we have to do something significant about the way 90 percent of Americans are getting screwed economically.

In the meantime, it will be fascinating to watch the four corners of American politics play against and with each other. I won't be the least bit surprised if progressive populists and Tea Party outsiders work together on more issues over the next two years -- and presidential politics are going to be really fun to watch.