Steve Rose is a well-respected liberal economist who has written a fascinating essay entitled "Talking about Social Class: Are the Economic Interests of the Majority of Americans with the Democratic Party?" (Ruy Teixeira, a pollster associated with the Democratic Party, highlighted this paper in a recent post).
Since the Republican policies over the last 25 years have favored the rich and appealed to cultural conservatives, then ‘how do they keep winning?’ is a conundrum for progressives. Some commentators resolve this problem by arguing that many people do not vote their interests but respond to cultural/social concerns instead
But then goes on to say
Perhaps, we need to consider the alternative that the majority of people do not have basic economic interests to vote Democratic....It is an occupational hazard of those with big hearts to overestimate the share of the population that is economically distressed. In their desire to generate public attention and support to expand public policies, they argue that the system is “broken” and needs repair (e.g., candidate Edwards’ speeches about the two Americas). But,it makes a big difference whether the share of the population in need is 15, 35, or 50 percent.Liberals have relied on its identification with the “little guy” to be a unifying force based on a common self-interest. The data that are presented in this article would suggest that the number of people that directly benefit from activist state welfare policies is less than one quarter of the population. Other sectors of the population (e.g, college educated and young) have sympathies for redistributive and other progressive policies on the basis of moral values. But the support of many of these people for Democrats is not strong, and they can be swayed by fiscal and security concerns as well as various social issues
My personal belief is that the Democrats have erred by buying into "hairshirt economists." From Walter Mondale in 1984 to John Kerry in 2004, Democratic presidential candidates have run on the issue of balancing the budget, something which is neither economically sound nor a big winner politically. As Rose says:
A rising deficit is too abstract to have much immediate political effect because the federal government has run deficits for virtually all of the last 40 years without having a consistent effect on jobs and the economy
The one exception to this rule was Bill Clinton, who won by running on an investment and growth platform, even though he switched gears once he got into office. Al Gore, by contrast, ran on an anti-deficit platform which did not resonate with voters.