How Democrats Betrayed Their Roots and Gave Rise to a Rebellion

A conversation with Joshua Green about his new book "The Rebels."

Joshua Green is a national correspondent for Bloomberg Businessweek and the author of the bestseller Devil’s Bargain: Steve Bannon, Donald Trump, and the Nationalist Uprising. I spoke to him about the pro-market turn in the Democratic Party that not only set the stage for Donald Trump’s presidency but gave rise to a newly energetic left, a story he tells in his new book, The Rebels: Elizabeth Warren, Bernie Sanders, Alexandria Ocasio-Cortez, and the Struggle for a New American Politics.

Our conversation runs about 14 minutes; a lightly edited transcript is below.  

Paul Waldman: You tell the story of how Bill Clinton and Barack Obama's embrace of free trade and closeness with Wall Street really laid the foundation for Donald Trump's later success. Do you think that looking back on that period, the party's leadership had too much confidence in its historic identity as the party of the working man and just assumed that couldn't be undone?

Joshua Green: I think that's basically exactly right. The story I tell in The Rebels is the rise of Warren and Bernie and AOC and the strain of left-wing populism since the 2008 financial crisis. But to me, the story needs to begin and does begin in my book in 1978, because I argue that was the moment at which Wall Street first got its claws into the Democratic Party and started to steer it in a direction that eventually wound up in the crisis, that sort of lit the fuse that blew up in 2008, 2009.

I think a big part of the story originally, though, is that Democrats were just recoiling from the Carter years and from Carter's loss and decided two things. Number one, they needed more money to be able to compete with Ronald Reagan and Republicans in this new televised era of American politics. And number two, they needed to do something to make themselves more attractive to a broader swath of voters. And that meant in the early eighties, especially, shifting in a more explicitly pro-business, neoliberal, New Democrat direction.

I don't think that on its own was any kind of inexpiable sin, but if you follow Democratic politics through the 80s and 90s, through Clinton, through Obama, it created this set of conditions where Democrats were not only more pro-market, but were putting Wall Street people like Robert Rubin in charge of actually running the government and actually running the recovery from the economic crisis. And that just produced a set of conditions that were extremely dissatisfactory to lots of people, not just Democrats, but people on the right too. And I think that helps explain how we wound up with the rise of figures like Donald Trump on the right and Warren, Bernie and AOC on the left.

How Obama succeeded — and failed

Paul Waldman: Before we get to them, if we can jump to the financial crisis. Obama takes office, it's 2009; you write that TARP [the Troubled Asset Relief Program] and the bailout of Wall Street was financially a success – it did what they wanted it to do – but it was a political catastrophe.

I can remember that the attitude from Obama at the time was that, this isn't pleasant, sure, nobody likes Wall Street, but this is what we have to do. Even though they created this mess, there's really no alternative. Looking back, do you think that there was another path that Obama and his administration could have taken that would have done as good a job of restoring the economy, but not laid this kind of these political minefield that they were then going to end up tripping into?

Joshua Green: I do think that there are things they could have been done differently. If you talk to people like [Obama Treasury Secretary Tim] Geithner and his deputies today or in recent years, they'll admit as much. Weirdly enough, I was embedded with Tim Geithner in the six months after Obama took office because I was a writer for The Atlantic then and I was doing a big profile on him, so I had a really good up close view of what it was he was trying to do. And it wasn't that he was like this evil cartoon bad guy trying to hand money to the banks. He had spent years working on international financial crises through the Treasury. And Geithner and his allies, which included Obama, thought that the key thing that they would be judged on, the key variable, was how much taxpayer money it cost to rescue the economy, rescue the banks, get the economy back to growth, and produce a recovery that lifted up the middle class.

Barack Obama and Tim Geithner, March 2009 (White House photo by Pete Souza via Wikimedia Commons)

And his very clever way of doing that was to stuff these struggling banks full of money, to recapitalize their balance sheets, and then let them go off and grow and pull up the rest of the economy. And judged by Geithner's metric, the plan actually succeeded. TARP does these annual reports where they kind of update for years after the fact, how much it costs. The original worry was it was going to be $100 billion, $200 billion. I think the last one I saw when the book came out was something like $28 or $30 billion. So from a strict dollars and cents standpoint, huge success.

But of course, that discounted the political optics and the way people's lives were being led in the midst of this crisis. And if you look at who is responding the crisis between the George W. Bush administration and Obama, it was a lot of the same people. Tim Geithner was a key player in both administrations, which I think goes to show how thoroughly that market-centric view had been adopted, not just by Republicans, but also by Democrats.

A lot of the fights on blogs and social media sort of boiled down to “Well the Republicans wouldn't give it any more money,” and that's a valid point of criticism, but if you look at the original explanation for what would be done with that TARP money it was that Treasury would sort of take all these mortgages and adjust them so that people wouldn't lose their homes, and like within a week [Bush Treasury Secretary] Hank Paulson kind of tossed that plan out the door. And so what you wound up with effectively was this huge bailout for the banks, which were supposed to help middle class people, didn't, and basically we wound up with seven years of austerity and job loss and unhappy Americans who rightly saw bankers being bailed out and no one helping them.

So I think when you flash forward to the covid crash and the response to that, almost point by point, the different particulars were things that people like Elizabeth Warren had been calling for back in 2009. So middle class-focused stimulus, student loan freezes, eviction moratoriums, small business loans, not Wall Street bailouts. And I don't think it's any coincidence that the recovery has been incredibly strong in the two, three years since then. The stock market is not only at a record high, but unemployment is at levels it hasn’t been since like the Eisenhower administration, real wages are rising. The country is just objectively in much better shape. So to me, that really illustrates the effect that these left populist politicians and their critique of the Democratic Party circa 2008, 2009 has had, especially on Joe Biden.

The Dems move left

Paul Waldman: Let's fast forward to 2020. The Democratic presidential primary was I think in many ways the high-water mark for the left. You had Sanders and Warren, both with strong candidacies, and the center of gravity on issues like immigration and healthcare was much farther to the left than it had been. And yet, in the end, the Democratic primary voters chose the candidate who was most identified as a moderate. So I wonder what your takeaway from that was and how that fits into this whole story.

Joshua Green: Knowing I was going to be doing this book, I was sort of flip-flopping back and forth between covering Warren and covering Bernie during that 2020 primary. And if you remember, early on in that primary in the fall of 2019, the lefties were just completely controlling things. Not only was Warren leading primary polls in like September of 2019, but the whole issue set was framed around the billionaires' wealth tax and big structural change. It seemed like the folks on the left, especially the populist types like Warren and Bernie, really had a head of steam, because even after Warren declined a little bit, then Bernie was the one that rose up.

But to answer your question, I think that the Democratic left miscalculated on what it thought voters wanted or were willing to accept in 2020. The story I tell in my book is really about the rise of this left-wing economic populism. And I think that was very popular. You could see it in the wealth tax and other things. But by the time you get to the 2020 Democratic primaries – and I think this was largely a reaction to Trump – being a left winger in good standing meant that you not only had to have a strong position on economics, but you now had to be furthest to the left across a whole spectrum of issues, whether it was environment, Medicare for all, decriminalizing the border. This mostly predated George Floyd, so defund the police wasn't quite as much of an issue.

But I think that was just a miscalculation. What voters wanted, and I saw this out on the campaign trail talking to them, was: We want to get rid of Donald Trump. And if we can also usher in a great social democratic government, sure, that'd be great. That's what a lot of liberals said. But we're not going to risk nominating a Warren or a Bernie and having Trump win reelection. And so ultimately, everybody just galloped over to Biden in March, and that was that.

I don't think the story really ends there; obviously my, my book doesn't. I think Biden to his credit adopted a lot of what was good in the left populist platform and put a lot of that into place as president. But I think you're right. There was this high-water mark to me. It seemed like it was mostly around the Medicare-for-all fight, where the country wasn't ready for that. And I think belatedly now there's a recognition of that among most segments of the left.

Biden learns the lesson

Paul Waldman: If you look back at the Obama administration, there was definitely a kind of contempt from the administration toward the left, especially from some of his staff, but probably from Obama himself too. But Biden did what seemed like a very smart thing. After he beats Bernie Sanders, what does he do? He brings him in, they create these working groups where they're coming up with common ground on issues. The professional progressives that I've spoken to about this – members of Congress, people in think tanks – they were all genuinely impressed, that this was a sincere effort and they were going to have influence. It was not just for show, that they really were there in the room helping to determine what the policies of the Biden administration were going to be. That was in 2020. So my question is, over the course of the last three years, how has that relationship held up between the Biden administration and progressives?

Joshua Green: I think until fairly recently, it's held up really well. And you can point to all sorts of examples. The other one that stands out to me that just does not seem to get attention, I don't really understand why, is AOC was also brought into that process and worked with the administration, especially on climate issues. And Biden wound up passing, with bipartisan support, the Inflation Reduction Act, which contained within it a $300 billion climate bill, the biggest climate bill in US history. I don't think that happens absent the efforts of politicians like AOC and the people that she represented. There was a Twitter thread was going around the other day; you may have seen this if you still waste your time on there like I do. It's an environmental professor at Tulane who asked his class, how many people know about the IRA, know there are climate provisions in there? And nobody raised their hand. So even the most plugged-in environmental voters, at least younger ones, don't seem to recognize what's being achieved. And to me, that's kind of baffling.

Joe Biden signs the Inflation Reduction Act, August 2022 (White House photo by Cameron Smith via Wikimedia Commons)

I talked to folks in the Biden White House at the very end of this book, just to kind of get a sense of how they view the party's evolution and Biden's evolution as a president. And one of his top officials said to me, he said look, I think this is the best measure: The people that give us headaches in the White House are not Elizabeth Warren and Bernie Sanders. Biden is fine with them. He likes them. The people that give us headaches are Joe Manchin and Kyrsten Sinema.

And I think if you look at what Biden has accomplished, he has instituted large parts of that left progressive agenda in a way that all three of my characters, I think, realize and appreciate. And none of them chose to challenge him in 2024. So certainly on one level, they're happy. Now, I think that has started to fall apart after October 7th and the Israel Hamas attacks. You can see these giant fissures opening up on the left.

Paul Waldman: That's what I was going to ask. So we're now beginning to see these fissures that open up with, because of the consequences of October 7th. And I'm sure that if you went back a few years and asked your average young lefty person who's politically involved, what they think about Joe Biden's opinions about Israel, they would have no idea. But now they do.

Joshua Green:: They don't like them.

Paul Waldman: And I guess the question is, was there something kind of fragile about that alliance between Biden and the left all along that made it vulnerable to a shock like this? Or is that just sort of the nature of politics that coalitions are always fragile and anything can break them down?

Joshua Green: That's a really good question. I don't think I know the answer on this one. My book is focused mostly on economics, a little bit of environment. I mean, I don't know if you, I don't remember foreign policy being an issue. Maybe I'm wrong, I don't remember foreign policy being an issue at all in the 2020 Democratic primaries. And so I'll admit to being a little shocked. I saw some poll numbers the other day that showed Democrats under 35, like by three or four to one support Palestinians over Israelis. Just sort of shocking numbers. So I think it really is just the nature of politics and shifting political coalitions. And the fact that so much of this is visible on TV and on social media, I think has helped make it a front and center issue in a way that it just obviously wasn't six months ago. And that's a big problem for Biden. You can see it in his poll numbers, you can see it in the open public criticism he's getting from people like Bernie Sanders. And at this point, I would say it's certainly threatens his reelection prospects or makes it more difficult for Biden to carry the younger voters that he's going to need to carry to beat Trump.