Warren's Senate office blasted out a letter Wednesday. | John Shinkle/POLITICO Warren takes sides in Dem feud

As Elizabeth Warren waded in and a congresswoman running for Pennsylvania governor distanced herself, an escalating feud Wednesday between left-leaning groups highlighted a major fault line among Democrats over entitlements.

It started with an op-ed in Monday’s Wall Street Journal. Two leaders of the center-left think tank, Third Way, wrote that “economic populism is a dead end for Democrats.” Jon Cowan and Jim Kessler argued that plans to increase Social Security benefits, put off Medicare reform and raise taxes on the rich espoused by liberals like Warren are irresponsible, substantively and politically.


A chorus of groups aligned with the liberal wing of the party – from the Progressive Change Campaign Committee to Howard Dean’s Democracy for America and Russ Feingold’s Progressives United – responded by attacking Third Way as a Wall Street-funded front group.

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A liberal candidate running in a crowded Democratic primary, John Hanger, then joined these groups Wednesday morning in calling on Rep. Allyson Schwartz, the early Democratic frontrunner in the race to take on Pennsylvania Republican Gov. Tom Corbett next year, to resign as an honorary co-chair of Third Way.

By lunch time, Warren jumped into the fray. Her Senate office blasted out a letter from the freshman firebrand senator to the CEOs of the country’s six largest financial institutions, prodding them to disclose money they provide to think tanks like Third Way.

“Just as there is transparency around your direct efforts to influence policymaking through lobbying,” Warren wrote, “the same transparency should exist for any indirect efforts you make to influence policymaking through financial contributions to think tanks.”

A few hours later, Schwartz condemned the piece for the Journal but declined to end her affiliation with the group.

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“She read the op-ed and thought it was outrageous and strongly disagreed, and she told Third Way that,” said spokesman Mark Bergman. “She has constantly fought to preserve and protect Medicare and Social Security.”

Each of the groups involved said the back-and-forth is an opening salvo in a debate among Democrats that will only become louder through 2014 and 2016. As much as is written about the divide between tea party and establishment Republicans, the Democratic Party has its own ideological breach that the episode has brought to the fore.

Third Way co-founder Matt Bennett explained that JP Morgan CEO Jamie Dimon, one of the recipients of Warren’s letter, would see an increase in his Social Security benefits under a plan supported by Warren. Bennett said it is “magical thinking” to believe government can invest more in education and infrastructure while putting off long-term fixes to Medicare and simultaneously infusing more money into the Social Security system. Bennett added that his group is willing to take a short-term political hit to ensure the long-term political solvency of programs that seniors depend on.

“Our view as Democrats is that the entitlement crisis threatens the twin achievements of progressive politics in the 20th century, which is the safety net – the programs themselves – and the idea of government investment,” said Bennett. “Since we believe strongly both are vital, we’ve got to fix the problem.”

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The victories of Warren and New York City Mayor-elect Bill de Blasio have given liberals fresh confidence that their wing of the party is ascendent. Schwartz’s attempt to distance herself from Third Way emboldened the Progressive Change Campaign Committee to call on the centrist group’s other co-chairs to take public positions on the Journal op-ed.

“Third Way couldn’t have picked a less strategic fight than attacking two of the most popular things in the Democratic Party: Elizabeth Warren and Social Security,” said PCCC co-founder Adam Green. “It’s a huge blunder, and their credibility will take a big hit on Capitol Hill.”

The battle also previews something that could dog Hillary Clinton if she runs for president and draws a challenger from her left. Clintonism has long been synonymous with moderate, third-way-style politics. Leading moderates like Bennett are alums of Bill Clinton’s White House.

Warren’s willingness to take sides only boosts her standing as a darling of progressive activists. Green was ecstatic that she sent her letter after PCCC started circulating a petition to activists trying to get Third Way to fully disclose all their donors.

“In our minds, Elizabeth Warren is the north star to which the entire Democratic Party can look as they seek direction,” said Green. “The wind’s at our back, and Third Way’s kind of yelping from the sidelines.”

Third Way’s Bennett offered a more conciliatory tone. He noted the group’s support for the Dodd-Frank financial law, the Affordable Care Act and budget deals that have raised taxes on the wealthy.

“Our party is large and robust enough to have these kinds of policy disagreements,” he said, “and it’s important that no one try to drum anyone else out of the tent – the way Republicans do.”