The growing divide within the Democratic Party is now coming to a head, right here in California.
Ostensibly, the conflict stems from a proposed wealth tax that would target billionaires with a 5% levy, with progressive populists – led by Rep. Ro Khanna – on one side, and moderates – led by Gov. Gavin Newsom – on the other.
The progressive side is pushing the tax under the assumption that it will be popular with their constituencies – the far-left and labor unions – as well as with Democrats inside and outside of California.
Standing on the other side are moderate Democrats.
Newsom has come out against the proposal – albeit cautiously to avoid antagonizing the overwhelmingly far-left Democratic base – almost certainly due to his 2028 ambitions.
Indeed, any legislation which hurts California’s economy or gives Republicans an opening to tar him as a “tax-and-spend” liberal would be damaging with swing voters.
To be sure, Newsom’s position is one I most definitely agree with. Large tax increases are bad for the country, to say nothing of the cataclysmic effect they can have on Democrats’ presidential hopes.
Likewise, empowering state bureaucrats to value individual portfolios – which are often illiquid and not easy to value – is textbook government bloat, something national voters have no tolerance for.
However, in reality, the chasm is not about the merits of this specific tax, nor does it exist in a vacuum contained to the Golden State.
Rather, what is playing out in California represents the much larger struggle between progressive populists and moderates for the direction of the Democratic Party.
And while this fight has been brewing for years – as I’ve noted before in these pages – there is something unique about this situation that goes beyond whether or not the tax passes.
The divide is widening at an extremely sensitive time for Democrats.
In just a number of months, voters will head to the polls for midterms, the first nationwide test for Democrats following their across the board defeat in 2024, itself partly due to perceptions that the party was too far to the left.
Further, California’s significant, outsized role in Democratic politics and American culture means that whichever side – progressive populists or moderates – wins will set the tone and trajectory for the entire Democratic Party.
Right now, it would seem that the momentum is with the populists, still basking from Mayor Zohran Mamdani’s win in New York City.
Progressives dominate Democrats’ primary electorate, party activist roles, and have been vocal about wanting to use their influence to move the entire party further left.
Moreover, America’s political environment is currently rewarding populists, regardless of whether they come from the political right – President Trump – or the political left – Mamdani.
Nevertheless, as powerful as the progressive populists may seem, the future of the Democratic Party depends on the ability of moderates to make a compelling case.
It is doubtful whether a far-left populist could win a presidential election on a platform of suffocating taxes, nanny-state regulations, extreme views on social issues, and a foreign policy that aligns with countries like Iran rather than allies like Israel or Saudi Arabia.
Put another way, as popular as progressives like Rep. Alexandria Ocasio-Cortez are in coastal enclaves dominated by the far-left, in a presidential election, is it likely that suburban voters in Pennsylvania, Georgia, or North Carolina are swayed by those positions?
For their part, Republicans will have similar issues, when the split between “MAGA” and traditional Republicans for the future of the GOP post-Trump comes into the picture.
But for now, with Trump in office holding the two GOP camps together, it is less urgent for the GOP compared to Democrats, who find themselves leaderless and caught between an ideologically-driven base that’s less nationally viable, and moderates who are often reviled by the base.
Assuming Democrats’ goal is to win back the White House within the near future, history underscores the importance of moderates being able to overcome progressives’ reflex to impose needlessly high taxes.
Just before I joined the administration of former President Bill Clinton, he signed the 1993 Omnibus Budget Reconciliation Act. That legislation – well intentioned as it was – significantly raised taxes.
The result was a historic loss for Democrats in the 1994 midterms.
Republicans won net-54 seats in the House and eight in the Senate, putting both chambers of Congress under GOP control for the first time since 1952.
Shortly thereafter, my then-partner Mark Penn and I joined Clinton’s team. We emphasized that polling data strongly suggested that a moderate form of fiscal conservatism would be widely supported by the voters.
Those efforts paid off. Between 1994 and 1996, Clinton cut taxes in a handful of areas, and continued to balance the budget, eventually winning the 1996 presidential election in a landslide.
Make no mistake, the lessons we learned in the Clinton administration remain relevant and should be heeded by Democrats today, as this debate is about more than one state’s proposed tax.
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Democrats will be considerably more successful if their future is aligned with fiscal moderation, the kind which speaks to the majority of the electorate.
Should the progressive populists, with their strong – but narrow – appeal prevail in this conflict, Democrats may find themselves extremely successful in pockets of the House of Representatives but locked out of the White House.
Conversely, if moderates – disliked by the base but much more electable nationally – win, then Democrats stand to avoid a 1994-style blowout, and may even be set up for a 1996-style victory.
Douglas Schoen is a longtime Democratic political consultant.
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