In late January, President Obama met some two dozen CEOs at the White House to discuss the plight of the long-term unemployed. Frustrated by the refusal of congressional Republicans to extend unemployment insurance benefits, Obama persuaded several hundred companies to sign a “best practices” hiring pledge promising not to discriminate against those who have been unable to find work for a lengthy period of time.
Among the executives present was Don Thompson, who made nearly $14 million in 2012 as the CEO of the McDonald’s Corporation, and whose restaurant workers are paid so little that they must rely on $1.2 billion in public assistance each year. Also present was Boeing CEO Jim McNerney, who earned $23.3 million in 2013 while threatening to move his company to a right-to-work state if the machinists’ union did not accept a contract that froze pensions and limited future raises. Walmart, which last year chose to buy back $7.6 billion of its own stock when it could have raised employee pay by more than $5 an hour instead, signed the agreement, as did JPMorgan Chase and Bank of America, whose fraudulent mortgage practices helped tank the economy and destroy decades of middle-class wealth. “I was really grateful to all of them for stepping up in this way,” Obama said.
The confab neatly illustrated the Democratic Party’s current predicament. As public disgust with rising inequality and a protracted jobs crisis compels a populist approach to governing and campaigning, the party remains inextricably tied to some of the elites responsible for the underlying problems. Publicly, the party seems united—but who is truly dedicated to reversing the country’s alarming descent into oligarchy, and who is just using the issue of the day to burnish their credentials or troll for votes?
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At first blush, it might seem difficult to discern pretenders from true populists. Almost everyone who identifies as even an inch left of center acknowledges the need to address income inequality. The centrist Democratic think tank Third Way is a notable exception: it issued a lonely warning in a December Wall Street Journal op-ed that economic populism is “a dead end for Democrats.”
But look everywhere else: Chuck Schumer, the third-ranking Democrat in the Senate and one of the party’s biggest recipients of Wall Street campaign donations, laid out an unmistakable populist offensive in a January speech. “We must focus, this year, on four or five simple but compelling examples of where government can help the average family,” he said. Schumer suggested that Democrats pick and choose from a range of issues that includes extended unemployment insurance, raising the minimum wage, college affordability and other education assistance, infrastructure spending, equal pay for women, universal pre-school, job training and closing corporate tax loopholes. Obama echoed Schumer’s populist pitch days later in his State of the Union address. Even folks like former Treasury Secretary Larry Summers are declaring income inequality “a major economic issue in the United States and beyond.”
The gloss of consensus, however, obscures deep divisions about inequality—including the explanation for its origins. Progressives like Massachusetts Senator Elizabeth Warren explain concentrated wealth as the result of a rigged system that funnels the gains from workers’ productivity to their bosses. On the other hand, a competing story of American inequality has emerged—one that “basically says it’s something happening out there, to us, and if we are at fault, it is only that we have been slow in responding to what’s happened,” observes economist and Nobel laureate Joseph Stiglitz.