Elizabeth Warren and Rahm Emanuel represent the party's two sides. | AP Photos Dem divide looms for Obama

As President Barack Obama approaches his second inaugural on Monday, he presides over a party that has largely papered over its divisions for the past four years thanks to the president’s commanding popularity.

But almost as soon as the echo of Obama’s inaugural address fades and he instantly becomes a lame duck, Democrats are going to have to face a central and unresolved question about their political identity: Will they become a center-left, DLC-by-a-different-name party or return to a populist, left-leaning approach that mirrors their electoral coalition?


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An immediate answer may come in the entitlement debate and whether Obama and congressional Democrats will agree to any Social Security or Medicare benefit cuts to achieve deficit reduction, said a wide-ranging group of Democratic elected officials and strategists.

“In the short term that’s the flash point,” said longtime Democratic consultant Paul Begala.

But as moderate Republicans become an ever rarer breed and more centrists find a home in the Democratic coalition, the party also must reconcile exactly who they are on a broader panoply of economic issues including Wall Street regulation and public employees. As 2016 grows nearer, and their presidential hopefuls begin openly maneuvering, Democrats must decide whether they want to be principally known as the party of Rahm Emanuel or the party of Elizabeth Warren.

“One of the challenges is how we continue to do the right thing while working with a wide coalition of people, both workers and business,” said Minnesota Sen. Amy Klobuchar.

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For decades, it was culture that divided Democrats internally as they scrambled to fend off GOP charges of extremism on issues ranging from race to gender to gay rights. But thanks to Bill Clinton nudging the party on matters like welfare reform and to broader cultural shifts in the country, there’s now a consensus on social issues: Democrats overwhelmingly are in agreement on abortion rights, same-sex marriage and immigration reform. And while there may be tensions within the party’s ranks on Capitol Hill on gun control, there’s wide and deep consensus on the issue in statehouses and among the grass roots.

It’s not so much Obama’s policy choices that have reshaped the party as much as it is the rise of the Obama coalition — a largely tolerant amalgam of youth, minorities and women. It’s unthinkable, for example, that any serious Democratic White House contender in 2016 would not toe the party line on such issues. The Republicans are now the ones confronting internal divisions on such cultural matters as they contend with how to appeal to a rapidly changing country.

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“The center has moved,” said veteran Democratic strategist Mandy Grunwald.

For Democrats, the gulf is over fiscal and class issues, between their populists and their elites on how to appeal to a broad group of voters while retaining their traditional commitment to those in need. In other words, finding a way forward that represents the interest of their supporters making six (or seven) figures in places like McLean, Va., and Bryn Mawr, Pa., while staying true to middle-class backers in La Crosse, Wis., and doing right by the poor of Albuquerque and Philadelphia.

“The real struggle within the Democratic Party is where you stand on income inequality and whether the government needs to be a part of fixing that problem,” said Rep. Keith Ellison (D-Minn.), co-chairman of the Congressional Progressive Caucus. “The demographics that the Democratic Party must attract are the people who need responsive government.”

Moderate Democrats counter that center-versus-left formulations are outdated — while making an emphatic case for pragmatism.

“I know what has been incredibly successful for the party and country: the banner of reform and change,” said Emanuel, adding that there is “no part of the budget that’s immune to reform and change” so long as Democrats don’t abandon their traditional “mission.”

How exactly that mission is defined promises to shape the coming debate over Social Security and Medicare.

The differences in the Democratic coalition are razor sharp. Take the question of whether Obama and Congress should consider raising the eligibility age for future Medicare recipients as a way to find savings.

“That stuff you debate out,” said Emanuel, adding: “I don’t think raising the age of Medicare to 67 is a centrist or a liberal idea.”

But to a progressive stalwart like Sen. Sherrod Brown (D-Ohio) such an idea isn’t just ill-considered — it’s “morally reprehensible.”

“That is such a Washington, Heritage Foundation construction,” Brown said of raising the eligibility age.

Reminded that some of his own colleagues are open to it, he shot back: “They’re wrong.”

And he wondered, speaking of both Democratic and Republican advocates of such reform, “Do they not ever talk to factory workers, construction workers, people that work in diners?”

Such talk exasperates centrist Democrats like Delaware Gov. Jack Markell, a second-termer who has taken the helm of the National Governors Association.

“I hope we’re the party of math,” said Markell, saying of the eventual costs of Medicare and Social Security: “It doesn’t make any sense to put our head in the sand on this issue.”

The Delawarean called reflexive opposition to structural reform in New Deal and Great Society programs is short-sighted.

“It’s easy to try to take the populist approach,” he said. “But in the long run not sustainable. The sooner we figure that out the better.”

Matt Bennett, a top official at the centrist group Third Way, said there’s a pragmatic case for Democrats to embrace entitlement reform now.

“It’s insane to not try to do a big deal right now because every minute you wait the deal gets worse,” said Bennett. “Do we really want to turn over entitlement reform to Jeb Bush or Marco Rubio? Because let’s face it [Republicans] have a 50 percent chance of being president. The same party rarely gets third terms. Why gamble instead of having President Obama cut this deal?”

Even Howard Dean, the former Vermont governor and 2004 White House hopeful, a progressive on some issues, said it makes sense for Democrats to act now on entitlements.

“I would advise [Obama] to go ahead with changing the entitlements because if we do it’s going to be much better than if the Republicans do it,” Dean said, “If you’re willing to show some courage and do some thinking, this can be done and should be done by [the Democrats].”

Liberals dismiss such fretting, arguing that the country’s fiscal straits are overstated and, anyway, pale in comparison to joblessness of the present that needs more urgent attention.

“The best way to get out of a deficit is to grow your way out of a deficit,” said American Federation of Teachers President Randi Weingarten. “We have an object lesson from what Europe has done — just going at it from austerity does not work. There has to be a balanced approach, and there are those of us who will fight very hard against benefit cuts in Medicare or Medicaid or Social Security because we know people are living on this.”

AFL-CIO political director Michael Podhorzer was even blunter.

“There’s no denying that there are two Democratic parties,” said Podhorzer. “One that has a fair amount of allegiance to Wall Street and to the notion that it’s no big deal to raise the retirement age or cut benefits. They see the Democratic coalition of the future being more upscale. But there’s a big part of the party that still sees Democrats as still being anchored by downscale.”

“There’s a schism up-down,” said Begala.

Labor officials point to the stark numbers from last year’s presidential election: Mitt Romney won 53 percent of the vote among those making over $50,000 a year while Obama captured 60 percent with those making less than $50,000.

And the growing share of minority voters in the country should ensure Democrats hew to a liberal line, said Center for American Progress head Neera Tanden.

“As you look through presidential elections, I do believe we’re going to see a more and more and more diverse electorate,” Tanden said, adding that the broadening of the Obama electoral coalition into a “bigger and bigger share of the electorate is going to mean a more progressive posture on issues.”

The disconnect in the party now is between many of their elected officials and a sizable chunk of their base.

Brown, a traditional populist who has kept to the true faith even since moving from the House to the Senate, lamented that among members of both parties his new chamber “has an upper-class accent.”

Look no further than Brown’s 2010 amendment to the Dodd-Frank legislation introduced along with former Sen. Ted Kaufman (D-Del.) that would have broken up the country’s biggest banks. It got only 33 “yeas” and faced a bipartisan wall of opposition.

The issue of Wall Street reform, while somewhat dormant since the passage of Dodd-Frank, is another major fault line in the Democratic family and raises a sensitive topic: the provenance of campaign funds for a significant number of their elected officials.

“The problem is that Wall Street money in both parties has silenced the establishment of both parties,” said Jeff Connaughton, Kaufman’s former chief of staff and the author of “The Payoff,”a cri de coeur on the political power of banks. “Until we have another meltdown the lesson is that even a devastating financial crisis can be managed from Bob Rubin’s front porch.”

“I wouldn’t be fully candid if I were to say to you that Democrats aren’t overly dependent on Wall Street,” Ellison said.

“A party in bed with Wall Street wouldn’t have passed Dodd-Frank,” fired back Rep. Rob Andrews (D-N.J.).

But to the likes of Markell, Wall Street ought not be vilified.

“My hope for our party is that we remember that 99 percent of workers at financial institutions are good, middle-class people,” he said. “They’re an easy target, but we need a vibrant financial services industry and I don’t think we do a lot of good when we pick these battles.”

Brown said he’s going to keep pushing his legislation to break up the banks and he and other progressives pointed hopefully to the arrival of Massachusetts Sen. Elizabeth Warren as a political force who could keep the pressure on Wall Street.

As 2016 grows nearer, the other major fault line likely to emerge on the issue of public employees. Democratic governors and mayors grappling with strained budgets are having to do battle with unionized government workers who often double as the worker bees in Democratic campaigns.

Emanuel, who clashed with his city’s teachers union last year, said he was focused on the greater good of his community even if that meant not always pleasing municipal unions. He recalled contentious town hall meetings over whether or not to lay off some of the city’s downtown traffic aides.

“Is the budget about traffic aides or is it about moving traffic efficiently through the city?” he asked.

New York Andrew Cuomo has also incurred the wrath of public employees in his state thanks to similar budget battles.

He memorably called himself “a progressive Democrat who’s broke” in his first year in office.

Indeed, Cuomo has been a living testament to the friction between pragmatism and some strains of progressivism in governing, just as Obama has. After tilting early toward the center on fiscal issues and “tangling,” as he put it, with public-sector unions to rein in costs, he gained national credibility with his party’s base when New York passed its gay marriage law. Yet he still became a favored target of liberal commentators during 2012 and recently has begun repositioning himself under the “progressive” rubric as firmly as possible.

Looking ahead to 2016, a harder line on public spending could be for the next generation’s center-left Democrats what welfare reform was for Bill Clinton — proof positive that DLCers were serious about the “responsibility” part of “opportunity, responsibility and community.”

“The main dividing line in the party will be: How do we go forward in a cost-constrained environment? How do we project a vision for progressive government when we don’t have any money?” said Bennett.