Reason No. 1: The Democrats depend on Wall Street for campaign donations.
Both national parties are captured to a large degree by financial industry contributors. But this is not as much of a problem for the Republicans as for the Democrats. Since Nixon, the Republicans have successfully channeled anger away from Big Money to Big Government. They have done so by manipulating the classic populist paradigm of producers vs. parasites. They have treated private sector workers, business owners and investors as allies in a common struggle of producers against parasitic public sector employees and poor people dependent on welfare.
To counteract this powerful neo-Jacksonian narrative, the Democrats would have to be equally pungent in their criticism of plutocratic bankers and overpaid CEOs. But how can President Obama and Democrats in Congress wave pitchforks at Wall Street while engaging in Wall Street fundraisers for their 2012 campaigns?
Barack Obama, who went without federal matching funds in 2008 so that he would be free to shovel in unlimited amounts of big money, is a particularly unlikely critic of Wall Street. In 2008, if professors at universities are not counted, the top institutional donors to the Obama campaign were Goldman Sachs, Microsoft, JP Morgan Chase, Citigroup and Time Warner.
Obama’s 2008 campaign looks less like William Jennings Bryan’s outsider challenge than like William McKinley’s successful fundraising in 1896 from the banking and corporate elite.
Reason No. 2: The Democrats rely increasingly for votes on elite professionals.
Having lost the white working class to the Republicans decades ago, Democrats have had some success in winning over upscale white professionals with liberal attitudes on social issues and the environment. But identification with the professional-class minority poses as many problems for would-be Democratic populists as does the party’s reliance on the financial sector.
The majority of Americans do not go to college and are not likely to be inspired by the elite progressive vision of a society where anyone with high test scores can study until his or her 30s, earn an expensive credential, and then get an interesting and fulfilling office job. The populist ideal is the horny-handed son of toil who can fix a car engine, not the meritocratic nerd who could flourish in a lightning round on “Jeopardy.”
Even worse, to avoid alienating their professional-class supporters the Democrats are forced to come up with absurdly restrictive definitions of “the rich” or “the wealthy” that will include billionaire hedge fund types but exclude the toilers who earn a quarter of a million dollars a year and can afford vacation homes, maids and private schools for their children. According to the Democratic version of populism, corporate lawyers who make less than $250,000 a year, along with janitors who make $15,000 a year and rely on food stamps, are both members of the suffering proletariat exploited by the rich. This explains the emphasis on the gains in income and wealth of the top 1 percent, rather than, say, the top 10 percent or 20 percent. And it explains the widespread opposition among Democrats to lifting the cap on wage income taxed by the Social Security payroll tax above the present limit of $106,800. It’s one thing for billionaires and millionaires to pay as much as their secretaries in taxes, and quite another for Democratic lawyers, consultants and professors with lower six-figure salaries to pay the same share of income in payroll taxes as their secretaries. A genuine populism of the left would go after America’s pampered and privileged professionals, not just billionaires.