Democrats Must Declare War on Inequality of Income, Wealth, and Political Power

Searching for a message to opposed Trump, Democrats can also address our crisis of legitimacy.

America is divided, and American Democracy is under assault. We are writing a series of posts applying the lessons of our book Divided We Fall, Why Consensus Matters by Alice Rivlin, Sheri Rivlin, and Allan Rivlin (Brookings 2022) to the present predicaments. Earlier…:

Jan 14, 2025: America is Certainly Divided Does This Mean America Will Fall?

Nov 26, 2024: The Harris/Walz Coalition Lost an Election, But It Should Not Turn Against Itself

Here We Go Again

We Democrats are currently engaged in a full-throated debate about how badly we lost the last election. Some are saying the presidential race was very close especially given the late change in candidate and pointing out that Democrats gained House seats and won many contested Senate seats. Others point to Trump’s victories in each of the seven battleground states and declining support among young voters, minority voters, and especially working-class voters (often defined as voters without a college degree) to make the case that Democrats lost so badly we need dramatic changes in structure and strategy.

It is tricky to argue that the 2024 election results did not deliver a mandate for Trump to govern, but at the same time the results do deliver a mandate for Democrats to change, but in the nuance of the numbers, that is indeed the case. Both sides are right. The race was very close, all the way to the end, when it was decided by less than 2 percent of the popular nationwide vote, and so close in the House and Senate that Trump and the Republicans will struggle to pass any partisan legislation or even pass a budget to fund the government without needing Democratic votes. Democrats are in no way powerless in the government right now. But the losses of support and underwhelming turnout among key segments (younger voters, minorities, voters without a college degree, the poor, and lower income voters) was like an iceberg cutting holes below the waterline of the Democratic strategic self-image creating a crisis of legitimacy for the Democrats even in our own eyes.

Democrats do not need a new strategy because we lost the 2024 election, we need a new strategy because we lost the 2010, 2014, 2016, and 2024 elections for all of the same reasons; Democrats do not have an economic message that connects with poor and working-class Americans giving them hope that our economic policies will make their lives better.

The Biden/Harris 2024 economic message failed to connect with voters in the bottom half of the American economy because it was false for individuals and families in the bottom half. The Democrats’ message was: Bidenomics is working, the economy is good, unemployment is low because we have created millions of new jobs, and inflation is a problem but we are getting it down and wages are increasing faster than inflation. All of the statistics were accurate and this story was true if you aggregate the top half and the bottom half into one whole national average. And this felt true to you if you live and work in the top half. If you have a college degree, a job that pays an annual salary, you are building wealth (stocks, a 401k, or home equity), and you live within 25 miles of downtown in a major cosmopolitan city, the good economic statistics match your experiences and the people and places you see around you.

But if you look at the people in the bottom half: people without wealth, those without a college degree, hourly workers, some living in the inner cities but also the poor and struggling in the exurbs, small towns, rural counties in the middle of America, the good news vanishes in the statistics. You can go to the new tool for exploring economic data created by the Economic Policy Institute to verify for yourself that real wages (adjusted for inflation) did not rise for hourly workers from 2020 to 2024. If you punch a time clock rather than earning an annual salary, your income did not rise faster than inflation and the statistics coming from the Biden and Harris campaigns did not apply to you.

The bottom half of the distribution of wealth, income, and economic opportunity was not voting against their self-interest, they were voting their life experiences and economic prospects. Trump and the GOP were saying the economy was “bad” and Biden, Harris and the Democrats were saying the economy was “good” and for the folks at the bottom, Trump’s description was closer to their reality. That the Democrats did not know this represents a flashing red light indicating just how out of touch many of us have grown from the people living at the bottom.

Adding on 2/11/2025: Alice’s respected friend and colleague Eugene Ludwig just published this deeper analysis of the economic data detailing how the positive economic statistics presented a false picture of the economy for many Americans.

A Shift to the Left

Last weekend the Democratic Party selected a new Party Chair, Ken Martin who had been the Minnesota Democratic-Farmer-Labor Party Chair, and Parkland shooting survivor and gun-control activist, David Hogg, as DNC Vice Chair, in what many pundits are describing as a move to the left. We agree the Democrats need to move to the left but we do not say this because we are taking sides in the pointless intramural fights between progressives and moderates that have paralyzed the Democrats at key times in recent history. Divided we fall. We believe Democrats need to stay united and as a unified party agree on a change in strategy and a reevaluation of who we are, and who we are fighting for that will be interpreted by many observers as movement to the left.

But what we are really calling for is moving our attention to the folks at the bottom of the distribution of wealth, income, and political power. Democrats have historically represented the poor at least since Franklyn D. Roosevelt lifted the nation out of the Great Depression with the New Deal, John F. Kennedy and Lyndon B. Johnson passed civil rights legislation and Great Society programs, and Jimmy Carter used his post-presidency to build habitats for the homeless. After losing several presidential elections in the 1980s, Bill Clinton’s New Democrats de-emphasized the poor and stressed their connection to the middle class to win the White House in 1992. To regain our sense of who we are and who we represent, Democrats must identify inequality of income, wealth, and political power as the greatest threat to our economy and stand on the side of the people versus the powerful. If this framing sounds familiar, it is because the progressive wing of the party has been saying this all along.

Alice Rivlin was a member of the Clinton Administration, a consistent deficit hawk, and her final book was a passionate plea for greater bipartisanship written during the first Trump Administration so she was generally and correctly perceived to be aligned with the moderate wing of the Democratic party, but her politics were clearly moving to the left at the end of her life as she reflected on her career. She expressed her deepest regrets in her final book’s introduction where, speaking for herself and her colleagues in the bipartisan economic establishment, she offered three specific failures, each of which are relevant to America’s current predicament:

1) The failure to “recognize the full dimensions of the increasing economic inequality, racial inequality, lack of real wage growth, and the anxieties among the poor, the working class, and middle-class workers,”

2) “Not anticipating and avoiding the 2008–2009 financial crisis and economic collapse, the effects of which linger more than a decade later.” And,

3) “The third mistake was a failure to fight the pernicious effects of money on politics and public policy.”

Political scientists call it “regulatory capture” when industries gain influence over government regulators for their industry, and Alice asserts that this is what happened during the Bush, Clinton, and Bush administrations, as Wall Street bankers serving in the Treasury Department loosened regulations on the financial industry. She does not assert this was anything like Elon Musk breaking laws and acting as an unelected autocrat, or that deregulation of the financial industry directly caused the 2008–2009 financial crisis, but she acknowledged the likelihood that all three of these failures contribute to the loss of credibility and trust for the economic establishment, and government in general, and help explain the rising support for the populist economics on the right and the left.

In the next chapter of the book she declares inequality of income, wealth, economic opportunity, and political power to be the greatest challenge facing the US economy, and offers an economic plan directly designed to address inequality, through infrastructure investments, job training, and investments in high tech manufacturing in the middle of the country. These were all major policy achievements of the Biden Administration but Bidenomics was never framed as a battle to reverse inequality of wealth, income, and political power.

"Today, an oligarchy is taking shape in America. An oligarchy of extreme wealth and power and influence that threatens the entire democracy -- our basic rights and freedoms and a fair shot for everyone to get ahead."

Joe Biden, to the DNC meeting National Harbor, Maryland, 2/1/2025.

Fighting Trump and the Broligarchs:

The above quote from President Joe Biden to the DNC makes it clear the movement to the left is not just happening on the left wing of the party, and adds an additional reason to focus attention on the electorate in the bottom half of the wealth and income distribution: aligning our offense on economics with our defense of democracy.

American democracy, the Constitution, the rule of law, the authority of congress and the courts are under assault and we are in a Constitutional emergency, so most of the attention of nearly every Democrat is currently on defensive efforts to stop a coup d’etat. Many elected Democrats struggled to find their voice in the first days of the assault but now they are holding court with millions of resistors in the streets, on the Senate floor, and on social media. Lawyers from the unions, public interest NGOs, and attorneys general from several states are filing injunctions in civil court nearly as fast as the pace of new executive orders. They have won at least a temporary stay while many of the illegal actions are under court review.

The more we come to understand the planning, depth, breadth, and viciousness of the attack, the reckless disregard for the truth and the rule of law, the more we understand there can be no such thing as moderates and progressives in defense of democracy. As Senator Chris Murphy says, “we are in a red-light moment” we are fighting a lawless and corrupt attack on our government, America’s government, the government built by laws and budgets passed by congress and signed by presidents. We need all hands on deck to stop the lawbreaking and defend our democracy. If we lose our democracy, it is game-over for any disputes between moderate Democrats and progressive Democrats.

The brazenness of the opposition unleashing the world’s richest man, Elon Musk, to lead a band of hackers and hacks to do the dirty work of shuttering agencies, issuing pink slips, scraping the data from sensitive government computers, and cutting funding to feed the world’s starving children naturally focuses the attention of our messaging on the cruelty of the inequality of economic and political power. This offers all of our speakers an opportunity to recast attention to the ways Democrats have always used the power of the government to protect and empower those among us who are facing the greatest challenges and roadblocks to achieving the American dream.

Most Democrats already understand that it is important to convey that our passion for this fight does not come from the need to protect government agencies, government programs, or government employees, we are fighting for the people who depend on these necessary lifelines. Musk and Trump are attempting to cut or eliminate food aid to starving children, meal deliveries for shut-in seniors, cancer research, the list keeps growing daily, and the Project 2025 blueprint lets us know we can expect to see far broader efforts to cut funding for aid to the poor and working poor. We are in a coup, and a coup is a war. Democrats must make it as clear who we are fighting for as who we are fighting against.

On defense we are compelled to fight on terrain chosen by the other side. Trump picked the first beachhead by selecting USAID for termination because they believe these programs are unpopular with the MAGA base and the public. But this is not a fight about policy, it is a fight about the law, specifically, The Congressional Budget and Impoundment Control Act of 1974. This law was passed by Congress to make it clear that President Richard Nixon did not have the power to do what Trump is doing now, impounding public funds (that is, not spending money as directed by Congress). Nixon signed the 1974 law, which also created the Congressional Budget Office, shortly before he resigned from the White House. Passed by Congress and signed by a president, the 1974 Congressional Budget and Impoundment Control Act is the law of the land.

On offense, Democrats choose the terrain by defining ourselves and our values by the people for whom we are fighting. As Musk and Trump announce new targets daily and with a government shutdown looming, Democrats are free to fight for everyone who depends on any government program and we should talk about the popular ones: Social Security, Medicare, Medicaid, infant formula and food for mothers and babies, FEMA, air traffic control, and research to fight diseases including cancer, Alzheimer’s, bird flu.

We stand with farmers who are being hit with a triple whammy from the Trump administration that is taking away foreign markets with tariffs and cuts to USAID, taking away domestic markets with cuts to food stamps (TANF) and school lunches, the immigration crackdown will shrink the agricultural workforce and raise labor costs as they are cutting Medicaid funding closing rural hospitals.

We stand with workers who fear robots and artificial intelligence taking away American jobs. Elon Musk’s grand plan to replace most of government workers with algorithms just as he did at X may not bother some Americans, but they sure do not want to see this happening at their company. Musk is fighting the battle between robots and humans, and Democrats must be on the side of the humans.

If we fight for the people who depend on any government program, let the other side come back with clarifications as to what is or is not on their list of cuts. This is called “a budget,” the legal way to do what they are doing now illegally. Normal presidents propose a budget for next year in February, and congress needs to pass a budget for the rest of this year in a few weeks. “Show me your budget” was President Biden’s strong position in 2023 but he let the Republicans off the hook to avoid a default on the US debt. Democrats are unlikely to show the same grace this time around.

Donald Trump understands bargaining leverage and he knows he does not have enough Republican votes to pass a budget that includes a tax cut that explodes the national debt either with or without cuts to Social Security and Medicare. This is why Musk and Trump tried to eliminate the debt limit in December, but they failed because Freedom Caucus Republicans revolted. Republicans have been playing constitutional hardball with government shutdowns and debt default threats for decades, but in an actual constitutional crisis, with Republicans in control of the White House and both chambers of congress, and showing reckless disregard for the law, Democrats will have no incentive to bail Republicans out of their leadership crisis.