Obama, Inequality and Wall Street Donors

The Washington Post‘s Zachary Goldfarb reported on July 4 that Barack Obama has stopped talking much about inequality. But instead of explaining why this is happening, the Post frames the issue as a debate between left-leaning populists and  “moderate” Democrats trying to avoid “class warfare.”

The piece leads off with this:

After making fighting income inequality an early focus of his second term, President Obama has largely abandoned talk of the subject this election year in a move that highlights the emerging debate within the Democratic Party over economic populism and its limits.

Goldfarb adds that Obama has “shifted from income inequality to the more politically palatable theme of lifting the middle class,” framing the decision as a clash of ideas:

The shift also underscores the ongoing dispute between the Democratic Party’s liberal and moderate wings over how to address inequality issues. Whereas the left takes a more combative tone, seeking to focus on the income gap and what it views as the harmful influence of big business and Wall Street, more centrist forces in the party favor an emphasis on less-divisive issues.

He also notes that some  people “close to the White House contend that the move is at least partly driven by Democratic polling that found that talking about income inequality does not register strongly with the American public and risks accusations of class warfare.”

But the piece offers no real evidence that people, and Democrats in particular, are less concerned with inequality or measures that might fight it. This isn’t the first time media have warned Democrats about going “too far” with economic populism. Earlier this year–when Obama evidently starting talking more about inequality–the Associated Press warned that this “put him at risk of being perceived as divisive and exposed him to criticism that his rhetoric was exploiting the gap between haves and have-nots.”

But as pointed out on the FAIR Blog (1/28/14), the only evidence was that Republicans opposed efforts to combat inequality.  Democrats and independents were overwhelmingly in favor of government action to reduce inequality.

So what could explain the White House shift away from issues that could be quite popular with voters in an election year? The Post doesn’t look for explanations, but a few days later, a piece in the New York Times (7/7/14) offered some clues. That article was focused on Hillary Clinton’s close relationship to Wall Street and how this affects her possible presidential run.

But there are more immediate concerns, and some of them are unrelated to Clinton. To put it simply, the Wall Street donor class is not happy with Democrats talking about inequality:

As Democrats debate whether to get tougher on Wall Street, the industry appears to have taken notice. Securities and investment firm employees have given a smaller proportion of their political donations to Democrats over the last three years than any period for which data is available, according to the Center for Responsive Politics.

Perhaps it is cynical to think that the White House shift on inequality is connected to the fact that populism isn’t popular with the people who write big checks to political campaigns. But it’s a more plausible explanation than focusing on “combative” Democratic populists and moderates who wish to be “less divisive.”