How income & wealth inequality are driving the political divide

Yahoo Finanace's Rick Newman discusses how income & wealth inequality are driving the political divide.

Video Transcript

- We want to bring in Rick Newman to discuss a little bit more about this and what we've seen play out across the country over the last week or so. Rick, Biden won, but you can see, though, by the numbers that this is an electorate that is extremely divided. What do you think is behind this?

RICK NEWMAN: Yeah, Biden won by not huge margins in both the electoral and the popular vote. Trump still got more than 72 million votes. 47% of people who voted went for Trump. And I mean, we all know Biden backers who are saying to themselves, how can so many people support Trump after, you know, this chaotic presidency with so much divisiveness. And I think that we have to keep in mind there are really some important economic factors behind this.

I mean, we still have a deeply divided economy. You know, more than ever, the economy has sorted itself into people who are connected to the global economy and to the digital world and are doing fine, and they increasingly are in urban environments, around big cities. And more and more, those are Democrats, and that's where Biden got a lot of his votes.

We see the Trump vote coming from economies where median income has actually been declining rather than rising. These are parts of the country where-- you know, that do not represent a big portion of overall economic activity. And to some extent, these are people who feel like they're falling behind.

Now, it's hard-- you know, it's-- you can overgeneralize here. It doesn't break down evenly along all these lines. But Trump voters, in a way, continue to express frustration that they just feel the modern economy is leaving them behind. And this is not going to change. I mean, this has been a problem in terms of worsening income and wealth inequality for at least 20 years. And it's getting worse now with the coronavirus recession, not better.

- So, Rick, I'm curious. This income inequality question, though-- if Democrats want to win future elections, they've got to win those counties in the middle part of the country where those issues you just mentioned are playing out big time. How does a Democrat-- AOC is not going to resonate in those counties. So how do the Democrats sell what they have to offer?

RICK NEWMAN: I think this-- I think this is a huge problem. And it explains part of the divisiveness we're talking about here. So you know, with Democrats now more focused on what's going on in urban areas, it's no wonder that, you know, their policies are now lots of diversity, affordable housing, things that typically benefit people in urban areas. And I mean, did you hear Joe Biden saying anything at all about, you know, agricultural reform or things like that that matter in more rural areas? You did not.

You know, Democrats used to be able to get at least 50% of the rural vote only 20 years or so. And now that has gone about 75% or more to Republicans. And it's just because of all these disagreements, and you sort of can't prioritize everybody at once. So that's why Democrats tend to come to the side of these progressive priorities that mainly help people in big cities. And Trump is talking about factories. And even though he didn't really do much to improve the manufacturing sector, he did talk to those people. And many of those people still support him.

So we've got two very different sets of solutions for what remains a vexing problem. And that is one of the reasons I think we're going to stay very divided.

- Rick, does this have any implications just in terms of Biden's policy, what he's going to be able to get through Congress, just in terms of some of these lawmakers trying to play to their base and make sure that they are reelected whenever they are up for re-election?

RICK NEWMAN: Yeah, it affects directly what happens in the Senate, of course, where rural states are overrepresented. And, of course, urban states are overrepresented in the House. But it looks pretty likely that Republicans will retain an advantage in the Senate. You know, they thought they might be able to flip a seat in Montana, for example, a rural state. They were unable to do that. They were hoping they could flip a Republican seat in Iowa. Nope. Not able to do that.

So unless they get really lucky, Democrats, and they're able to win those two runoffs in Georgia, which is pretty unlikely, Republicans are going to have a narrow edge in the Senate. And that will really just block probably 2/3 of what Biden wants to do or more.