Everyone wants Virginia’s Senator-elect Jim Webb to talk about Iraq, but the man The Weekly Standard recently called a “blood-and-soil conservative” wants to talk about something else: economic inequality. The day after he accepted George Allen’s concession, Webb barely let his NPR interviewer get a word in edgewise before jumping in to correct the misperception that his bid for office was motivated solely by opposition to the war. “I decided to run because of my concern…with the economic breakdown that’s happened in this country along class lines.”

Class lines? Mr. Webb is a man who has railed against the “collectivist taming” of American culture by Marxists and has served in the Reagan Administration. So why is he talking like Eugene Debs? “There are huge income inequalities…that we haven’t seen since the 1880s,” he said on NPR. “And wages and salaries…are at an all-time low as a percentage of wealth.”

As idiosyncratic as he is, Webb is not an anomaly. He’s part of a broader trend that has been obscured by the fast-congealing conventional wisdom that the election results were driven chiefly by the ongoing disaster in Iraq. If you drill down a little into those results, it’s clear that Iraq and Republican scandal can’t account for all the Democratic victory. Consider the Democrats’ success at the state level. The party picked up six governors, nine legislative chambers and more than 300 state legislative seats, none of which can plausibly be ascribed to discontent over Iraq.

As Webb suggests, the hidden story of the election was the appeal of economic populism in a country whose middle class is increasingly feeling the squeeze. Coast to coast, Democrats running for local and national office campaigned on raising the minimum wage, repealing welfare for Big Oil and opposing trade deals lacking protection for workers and the environment, and their message resonated with an electorate anxious about the economy. Half of all voters rated the economy not good or poor, and a full 69 percent said their family’s economic situation had either gotten worse or stayed the same since the last election. Democrats won both these groups by wide margins.

Ironically, in the weeks leading up to the midterm election, the Republican Party stole a page from the Democrats’ playbook and attempted to shift the focus toward the economy and away from the manifestly unpopular Iraq War. The thinking was that the years of relatively strong GDP growth coupled with relatively low unemployment would redound to the ruling party’s benefit, perhaps canceling out the anger over Iraq and corruption. The GOP’s strategy both worked and backfired. Voters did focus on the economy, but they didn’t reward Republicans. Exit polls showed that 39 percent of voters rated the economy as “extremely important” (roughly the same percentage as those who said the same about Iraq and corruption), but Democrats won those voters by twenty points.

This shouldn’t be surprising. Despite relatively strong growth, manageable inflation, high corporate profits and a bullish stock market, real wages continue to stagnate, productivity gains continue to be captured by the wealthiest 1 percent, income inequality has continued to get worse and, as Jacob Hacker argues persuasively in The Great Risk Shift, America’s middle class finds itself living with far more risk and income volatility than it did a generation ago.

None of these trends are new, but over the past six years the problems have grown so noticeable that even the neoliberal economists who crafted the much-celebrated Clinton economic agenda have begun to focus on correcting the perversely inequitable distribution of the fruits of economic success. After years of reading the likes of David Sirota and Thomas Frank urging Democrats to embrace their inner populists, Dems finally started getting the message: Aside from opposition to the war, the Democrats focused on attacking subsidies to Big Oil, blasting the corruption endemic to a system in which corporate special interests call the shots and advocating for “fair trade” over the so-called “free trade” agreements that benefit capital over labor. Even the Democratic Leadership Council, the most outspoken opponent of economic populism, has begun to come around. In 1995 Roll Call reported that “DLC officials think that, if Clinton calls for a minimum-wage increase in the State of the Union…it could wreak the same political damage as his 1993 vow to veto any healthcare bill that did not provide universal coverage.” By this election, the DLC was firmly behind an increase in the minimum wage.

In fact, the minimum wage just might have been Tuesday night’s most underreported story. Not only has the Democratic Congress pledged to raise the minimum wage within the first 100 hours but in the six states that featured ballot initiatives to raise the minimum wage above the national–Ohio, Missouri, Montana, Nevada, Arizona and Colorado–every one passed. In Montana it took 73 percent of the vote, and in Missouri 76 percent. Consider that the much-publicized stem-cell-research initiative passed in Missouri by only a few percentage points. That means hundreds of thousands pulled the lever for an increased minimum wage and against funding for stem-cell research.

“One of the interesting facts about this campaign is it has been able to bring together people across many political lines,” the Rev. Paul Sherry, national organizer for the Let Justice Roll Living Wage Campaign, told me. “I do a lot of speaking around the country, and when I say that a person working at $5.15 an hour full time makes $10,710 a year, you can see people’s eyes light up as they begin to think of their own circumstances.” (Not only did the minimum-wage initiatives run a clean sweep but their conservative counterparts fared poorly. Three states–Maine, Nebraska and Oregon–featured ballot referendums modeled on the Grover Norquist-backed Taxpayer Bill of Rights, which severely limits the growth in state government taxing and spending levels. All of them lost.)

At the national level, cable pundits almost immediately focused on a handful of winning Democrats with conservative stances on social issues–Jon Tester’s A rating from the NRA, Bob Casey’s opposition to choice and, obsessively, former NFL quarterback Heath Shuler, who defeated incumbent Charles Taylor in North Carolina’s 11th District while opposing abortion, gay rights and a guest-worker program for immigrants. But what the pundits didn’t mention was the role in Shuler’s victory of the district’s opposition to “free trade” deals. The area’s textile industry has been gutted by NAFTA, so when it came time to vote on CAFTA, Taylor was caught between his district, which wanted him to vote no, and the GOP House leadership, which wanted him to vote yes. So he skipped the vote altogether and CAFTA passed by one vote.

During the campaign, Shuler hammered Taylor for “selling out American families,” and he wasn’t alone in using trade as a wedge issue. A postelection analysis by Public Citizen found that campaigns cut twenty-five ads attacking free-trade deals, and that trade played a significant role in more than a dozen House races won by Democrats. In the entire election, Public Citizen noted, “no incumbent fair trader was beaten by a ‘free trader.'”

“Democrats have coalesced in favor of trade policy reform over the past decade as President Bill Clinton’s NAFTA, WTO and China trade deals not only failed to deliver the promised benefits but caused real damage,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division. To get a sense of just how far the consensus on trade in the Democratic Party has come, consider that Shuler was recruited to run for office by none other than Rahm Emanuel, the man charged with ramming NAFTA through a skeptical Democratic Congress in 1993.

Indeed, back when Emanuel was the NAFTA enforcer, he met some of his stiffest resistance from a young freshman Congressman from Ohio named Sherrod Brown, whose twelve-point victory over incumbent Senator Mike DeWine was one of election night’s highlights. In a column a few weeks before the election, David Brooks called Brown’s Senate contest “the most important political race in the country,” because as a “full-bore economic populist” Brown represented the most “vibrant strain” of the Democratic Party.

Brown is an across-the-board progressive: a supporter of gay rights, abortion rights and civil rights who voted against the Iraq War and the Patriot Act (though, disappointingly, for the Military Commissions Act during the campaign). In 2005 National Journal ranked him as more liberal than 86 percent of House members. But he managed to avoid being sliced apart by wedge issues or tarred and feathered as an out-of-touch liberal by focusing with Terminator-like persistence on a simple economic populist message: “fighting for the middle class,” as his campaign manager John Ryan put it to me. Ryan says that even when DeWine attempted to change the topic or attack Brown, the campaign spent 50 percent of its airtime in TV ads responding to the charge “and 50 percent of Sherrod looking onscreen with a working-class message and a middle-class message.”

In some ways Ohio’s a special case, having been particularly hard hit by globalization and with 83 percent of voters saying the economy was extremely or very important. The race came down to the have-nots outnumbering the haves: 37 percent of voters rated the economy excellent or good, and DeWine won their vote by forty-four points. But 62 percent rated the economy not good or poor, and Brown won those voters by almost fifty points.

I asked Ryan if, given Ohio’s particularities, he thought Brown’s message would be applicable in other parts of the country. “Take Columbus,” Ryan said. “Columbus is so much like the rest of the country, demographically, that companies from all over the country conduct focus groups there. There’s not a lot of factories, and it might be the one part of the state that might have gained some jobs with NAFTA. We went down to Columbus and we tested [Brown’s trade message] to see if it would work. The difference was that in Dayton people would say, I lost two jobs because of NAFTA, and in Columbus people said, I know someone who lost a job. It was one half-step away, but people got it–people understood that the government was not on our side.” In addition, Ryan pointed to Brown’s success in southern Ohio, which is by far the most conservative part of the state. In three southern counties, Brown’s support exceeded the number of registered Democrats by at least 20,000 votes.

Brown’s successful populism and that of other Democrats hasn’t gone unnoticed. Commentators have raised the specter of the rise of a “Lou Dobbs”-like wing of the party whose economic arguments are inextricably linked to a racialized nationalism, the kind of populism that’s equally comfortable bashing corporations that outsource jobs and “illegal aliens” who take away Americans’ jobs here at home, and whose opposition to the Iraq War, like Pat Buchanan’s, is rooted in an America-first isolationism. To be sure, economic populism has a dark side. It’s a fine line between railing against corporate-written trade deals because they hurt workers the world over, and scapegoating the brown-skinned Other who is stealing our jobs. Democrats haven’t always walked this line carefully: There was more than a whiff of demagoguery in John Kerry’s nomination acceptance speech about “closing firehouses in America” while opening them in Baghdad (why shouldn’t Iraqis have firehouses?). That subtext ran through many Democrats’ ads in this past cycle, as they rushed to declare their opposition to “amnesty,” a word as racially loaded today as “quotas” was in the 1980s. Heath Shuler’s ads attacking his opponent for “selling out our families” also ridiculed him for voting to set up a scholarship for Russian students (the horror!), while pledging that he would “put American families first.” Even Sherrod Brown talked in television ads about the need for “tighter borders.”

It’s the left’s perennial dilemma: Populism is a fundamentally majoritarian mode of politics–the have-nots versus the haves, the many versus the few–but a central part of the left’s most noble tradition is protecting the rights and interests of minorities. Yet if there’s going to be a center-left majority in this country, its electoral strength is going to rest on a coalition bound by a shared interest in economic justice. The Democrats face several obstacles to making that coalition stick. First, the infusion of corporate cash that’s about to flow into the now-majority party will provide a disincentive to go after corporate power in ways that voters clearly want. In the past, when caught between the interests of their donors and of their constituents, too often Democrats have advocated for the former: Just look at the vote on the bankruptcy bill. Second, the Democrats’ continued growth rests on a burgeoning Latino population, as well as on young people, who are more socially liberal than the population at large. So whose interests are going to get top priority?

Though difficult, it’s not an impossible situation to navigate. With the power to control the agenda, Democrats can leverage the electoral strength of economic populism to protect minority interests by making sure that socially conservative members never get the chance to cast a vote in support of things like a marriage amendment or a “partial birth” abortion ban. But that strategy will work only if the Democrats can enforce real party discipline and prevent socially conservative Dems from defecting on key issues like stem-cell funding, choice, abstinence education and immigration.

In the short term, Nancy Pelosi’s strategy seems to focus on the economic issues with the broadest range of support. Her agenda for the first 100 hours of her term as Speaker of the House is a package of mainstream, popular, progressive bills that would benefit a variety of the Democrats’ constituencies: a raise in the minimum wage, which would greatly benefit blacks, Latinos and single women; a cut in interest rates for student loans, which would benefit young voters; and bulk negotiation of Medicare prescription drugs, which would benefit the elderly. “The Republicans are here to concentrate the wealth of our country in the top 1 percent, and all the power that comes with that is at the expense of the middle class and those striving to be in the middle class–and that’s just plain wrong,” Pelosi said in a conference call the day after the election. “That’s why we need to get a progressive economic agenda out there. As long as I get my caucus organized around that, that’s more important to me than having a checklist.”