New York City Democratic Mayoral hopeful Bill De Blasio celebrates on stage with his son Dante, far left, daughter Chiara, wife Chirlane, to supporters at his election headquarters after polls closed in the city's primary election Wednesday, Sept. 11, 2013, in New York. (AP Photo/Kathy Willens)

Amid the clamor over the budget and syria, the Democratic Party has opened what will be a prolonged debate about its future after Obama. Progressive concerns about foreign intervention, the “war on terror” and the cascading NSA scandals continue to build, but at the center of this debate will be economic policy: What can be done to make the party work for working people again? Or, more simply, whose side are Democrats on? In the opening rounds of the debate, we are witnessing the resurgence of what Paul Wellstone dubbed the democratic wing of the Democratic Party, challenging Wall Street’s hold over economic policy. The recent torpedoing of Larry Summers’s candidacy to head the Federal Reserve and the victory of Bill de Blasio in New York City’s Democratic mayoral primary are just two expressions of this emergence.

Summers was rejected largely because Democratic senators held him accountable for championing the ruinous deregulation of Wall Street under Bill Clinton and the bailing out of the banks under Obama. Summers personified Washington’s revolving-door corruption, as he pocketed millions on leaving government for the Wall Street firms he had aided while in office. His withdrawal was a repudiation of Rubinomics, the Wall Street economics named for Robert Rubin, former co-chair of Goldman Sachs and Clinton treasury secretary, whose acolytes have dominated Democratic economic policy for two decades.

De Blasio’s victory is an early indication of the electoral clout of progressive insurgents. He came from the back of the pack to victory by indicting Michael Bloomberg’s Gilded Age inequality, calling for raising taxes on the wealthy to invest in universal pre-K and for requiring developers to build low-income housing.

The Occupy World

Tea party republicans capture the headlines with manufactured budget crises, while Occupy Wall Street has seemingly vanished—but we live in an Occupy world. Occupy protested an economy that works for the 1 percent, not the rest of us. It said this wasn’t natural or inevitable, that it came about because the 1 percent, as Senator Elizabeth Warren put it, “rig the rules.”

Occupy got the world right. Workers have been losing ground for decades: a typical household earns less than it did a quarter-century ago. In the three years coming out of the recession, the top 5 percent are the only group to have recovered all their pre-collapse income, with the top 1 percent pocketing 95 percent of income growth; the rest have yet to experience the recovery. Although Occupy scorned electoral politics, its framework informed Obama’s re-election message, as Obama painted himself as the champion of the middle class and Romney as personifying the 1 percent (aided, of course, by Romney himself).

In a recent Daily Beast essay, Peter Beinart details how the millennial generation, struggling to find footing in the worst economy since the Great Depression, has been formed politically by this. The millennials are looking for more government, not less. They want Obamacare expanded, not repealed. Burdened with college debt, they favor more public investment, more loan relief and curbs on the banks. They were central to Obama’s election and re-election—but they are moving beyond his politics of caution.

And what is true of millennials applies to most of the rising electorate, the Obama coalition of the young, people of color and single women that is the emerging majority in American politics. This rising electorate is sinking economically: African-Americans and Latinos were hit the hardest by the Great Recession, while single women are just as vulnerable. In the same way that Christian, white, older male voters drive the GOP primaries to the right, the rising electorate will open the way for insurgent populists in Democratic primaries.

The financial collapse and Occupy’s insight have shattered the bipartisan conservative consensus that dominated both parties after Reagan—on austerity, deregulation, free trade, privatization and more. Now progressives have the more compelling argument: for a generation, they argue, entrenched interests have rigged the rules, lowering taxes on the rich and stashing trillions abroad. They starved investments vital to our future, from renovating decrepit infrastructure to supporting public education from pre-K to college. Multinationals defined trade policies that racked up record deficits and shipped jobs abroad. Insurance and drug companies hiked healthcare costs to the highest in the world, as quality lagged. Banks have been rescued; homeowners and students have been abandoned. The old policies are serving only the few.

The Emerging Challenge

The debate among democrats has been obscured because they’ve naturally unified in the face of the Tea Party lunacy that dominates congressional Republicans. But progressives have grown restive. Many were angered in 2009 when Obama prematurely turned to deficit reduction, undermining any possibility of a further jobs program. Divisions deepened in 2011, when Obama offered Republicans his “grand bargain”: accepting cuts in Medicare and Social Security in return for GOP support for top-end tax hikes and loophole closing. Many grew exasperated at the beginning of Obama’s second term, when he compromised on his campaign mandate to hike taxes on the rich, while keeping the brutal sequestration cuts in place.

Now liberals are pushing a range of measures that challenge the limits of administration policy. These have no chance of passing, with the House controlled by Republicans and the Senate paralyzed by routine GOP filibuster. But they are the outline of a platform that will be taken into future election battles.

The Back to Work budget of the Congressional Progressive Caucus (CPC) details how an ambitious public investment agenda—in education, infrastructure, new energy and more—can be paid for by progressive taxes, including a financial transactions tax on Wall Street gambling. This would make our economy more competitive while putting people to work without raising deficits. Senators Sherrod Brown and Jeff Merkley, who have openly questioned the administration’s insufficient bank reforms, are pushing to break up the “too big to fail” mega-banks. Senator Warren has introduced legislation to redraw the Glass-Steagall division between commercial banks, with federally guaranteed consumer deposits, and investment banks, which should be gambling on their own.

Obama is picking the next showdown, as he moves toward seeking fast-track authority to approve the corporate-dominated Trans-Pacific Partnership trade accords. Brown, however, is already organizing opposition to fast track and detailing a fair-trade agenda. Led by Representative Mark Pocan, more than two-thirds of Democratic House freshmen signed a letter opposing fast track and expressing concern about the secretive TPP negotiations.

On some issues the president has joined Democratic progressives, for example in their call for a hike in the minimum wage, a push likely to reach fever pitch next year, as elections approach. And fifteen Democratic senators have joined Bernie Sanders in a letter calling on Obama to sign an executive order right now requiring government contractors to pay a decent wage. In the House, CPC members have joined the protests of fast-food workers, who are demanding decent wages in cities across the country.

This past spring marked the opening of what will be a searing debate about how to make college affordable. With interest rates set to rise, Obama called for linking subsidized loan rates to the ten-year Treasury note. In contrast, Senator Warren promoted legislation to give students the same rate big banks get from the Federal Reserve, below 1 percent. If we’re subsidizing the institutions that blew up the economy, she argued, surely we should subsidize students, whose education is critical to our future. The end compromise was close to Obama’s original plan, but this fight has only begun.

These debates are merely a part of the growing progressive dissent against Obama’s cautious politics. The gay rights and Latino movements taught progressives that the administration responds only if challenged. The huge opposition to intervention in Syria reflected not just war fatigue, but growing doubts about policing the world. The NSA scandals brought progressives and libertarians together to try to curb unconstrained surveillance. Parents and teachers everywhere are joining to counter the assault on public schools. The conflict over climate change and energy policy will be as tempestuous as the extreme weather.

These stirrings may begin to take form in the 2014 elections. After cutting a deal with Republicans to keep the government open—which in the end is inevitable—the White House will likely continue to try to sell this economy as being on the right track: 7.5 million new jobs, manufacturing up, etc. Democratic candidates, however, will not fare well if they give Republicans an open field to indict this economy. They must present themselves as champions of reform, not of the status quo. They will run against GOP obstruction, but they must also lay out a much bolder critique and agenda to have any chance of getting their voters to the polls.

Given how gerrymandered House districts are, and given the number of Democratic Senate seats up for election in conservative states, 2014 is unlikely to deliver a clear message. In 2016, however, the rising progressive challenge will make itself felt. Not surprisingly, the punditry is focused on 2016, establishing Hillary Clinton once more as the overwhelming favorite. But she will not run in a vacuum, and she cannot assume that the desire to elect the first woman president will sweep her to victory.

If progressives continue to organize and push their agenda, Hillary may have to adjust. Already there is attractive leadership making the case: Warren, Brown, Merkley, Sanders, Tammy Baldwin and Sheldon Whitehouse in the Senate, and growing numbers of progressives in the House. There’s an implicit platform challenging the discredited conservative consensus on investment, taxation, trade and manufacturing strategy, education and more. The organized base of the Democratic Party—unions, online activists and a growing progressive infrastructure—will mobilize resources and activists for compelling issues and candidates. And the majority coalition that Obama helped forge is struggling, and looking for champions. This is a campaign in waiting, looking for a candidate. Hillary may find it prudent to embrace a far more progressive agenda and posture than she has in the past.

The obstacles are formidable. Big-money politics are more unconstrained than ever. Entrenched interests capture regulators and legislators alike. As the right’s perfervid hatred of Obama has shown, the politics of division has force. Many of the more attractive rising Democratic candidates—Cory Booker in New Jersey, the Castro brothers in Texas, Gavin Newsom in California—are modern-age New Democrats, social liberals tied to Wall Street and Silicon Valley money. And no doubt, Hillary is an unlikely populist champion.

But as the rejection of Summers shows, the Wall Street wing of the party has lost legitimacy. And the de Blasio victory reveals the potency of a populist challenge, even on Wall Street’s home turf. The stirrings are there. Politicians don’t create movements; they react to them. Occupy captured the reality. Compelling leaders are arguing the case. The question is whether a citizens’ movement will force a serious hearing at the electoral level. If it does, 2014 and especially 2016 could mark far more of a change than predicted.