Liberals waging war against moderate Democrats

A battle – perhaps a precursor to a 2016 civil internecine war – has broken out in the Democratic Party as liberals go on the attack against the pragmatic, centrist think tank Third Way.

The outcome of this internal strife could have a big impact on Hillary Clinton and the Democrats’ chances in the next presidential election.

Disturbed by the growing economic populism within the Democratic Party, two top Third Way officials wrote in a Wall Street JournalOp-Ed piece that the political path tread by Democratic Sen. Elizabeth Warren of Massachusetts leads to one conclusion: “Nothing would be more disastrous for Democrats.”

 

The liberals instantly responded by going on the attack. Warren, whom Third Way refers to as a dreamer from “midnight-blue Massachusetts,” shot off a letter to key Wall Street firms demanding that they reveal any contributions they have made to Third Way.

In other words, this is a wrestling match between the left-wing ideologues and those moderates and centrists labeled as “corporatist Democrats.”

I admire Warren’s liberal inclinations in recent years to protect the “little guy” from the capitalism-gone-wild actions of the too-big-to-fail Wall Street casino-banks.

But, frankly, I express no thrills in saying that I think Third Way effectively slammed Warren’s newest proposals, which include an expansion of Social Security benefits in a time when traditional, guaranteed benefits from corporations -- reflecting a number of years worked -- have been eliminated or reduced.

 

Here’s a portion of the WSJ Op-Ed piece:

“The (populist) movement relies on a potent ‘we can have it all’ fantasy that goes something like this: If we force the wealthy to pay higher taxes (there are 300,000 tax filers who earn more than $1 million), close a few corporate tax loopholes, and break up some big banks then -- presto! -- we can pay for, and even expand, existing entitlements. Meanwhile, we can invest more deeply in K-12 education, infrastructure, health research, clean energy and more.

“The problem is that since 2010 Social Security payouts to seniors have exceeded payroll taxes collected from workers. This imbalance widens inexorably until it devours the entire Social Security Trust Fund in 2031, according to the Congressional Budget Office. At that point, benefits would have to be slashed by about 23 percent.”

Third Way’s president, Jon Cowan, and Jim Kessler, a vice president, point out that Warren’s plan for entitlements would award increased Social Security benefits at the worst possible time. The plan requires a $750 billion SS tax increase over the next 10 years that will hurt Millenials and Gen Xers the most, and will levy an additional $750 billion burden on employers. This “collision course” ignores the trillions of dollars in Social Security shortfalls that will occur over the next several decades under the federal government’s current path.
Meanwhile, the liberals condemn a pragmatic plan such as a “chained CPI” – a reduced cost-of-living boost for seniors based on their purchasing practices, not those of young families.

The Third Way perspective includes this:
“Even more reckless is the populists' staunch refusal to address the coming Medicare crisis. In 2030, a typical couple reaching the eligibility age of 65 will have paid $180,000 in lifetime Medicare taxes but will get back $664,000 in benefits. Given that this disparity will be completely unaffordable, Sen. Warren and her acolytes are irresponsibly pushing off budget decisions that will guarantee huge benefit cuts and further tax hikes for Gen Xers and Millennials in a few decades.”
What we have here is the crowding-out of smart federal fiscal policy in favor of generous proposals designed to please the old-time Democratic base.

Cowan and Kessler explain that in the 1960s, the federal government spent $3 on infrastructure investments for every $1 on entitlements. Today, they note, the ratio is flipped. In 10 years, we will spend $5 on the three major entitlement programs (Social Security, Medicare and Medicaid) for every $1 on public investments.
Their Op-Ed also cites a referendum to raise taxes on high-income Coloradans to fund public education and universal pre-K that failed in a landslide at the ballot box last month. Colorado is one of those western swing states that is becoming more Democratic but also presents itself as a toss-up in presidential elections and has expressed limits to liberal governance.
Third Way makes the case in cautioning against unfettered economic populism this way:
“This is the type of state that Democrats captured in 2008 to realign the national electoral map, and they did so through offering a vision of pragmatic progressive government, not fantasy-based blue-state populism. Before Democrats follow Sen. Warren … over the populist cliff, they should consider Colorado as the true 2013 Election Day harbinger of American liberalism."
Still, left-wingers such as those at the Progressive Change Campaign Committee leveled harsh criticism at Third Way and asserted that that all those within the Democratic Party must take sides. 
"Third Way has always been a below-the-radar ‘creep’ that gives really bad policy advice to Democrats," Adam Green, the PCCC's co-founder, told Business Insider. "In this case, they attacked the two most popular things in Democratic politics -- Elizabeth Warren and Social Security.

"The question is, will Third Way's ideas be repeated, or will Democrats follow the North Star that is Elizabeth Warren?" Green added.

"Every Democrat will face these questions, including Hillary Clinton."