What's the matter with Economic populism

A sobering new train of thought is sweeping through the centrish-left blogisphere:

Nothing is the matter with Kansas.

"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."

On the other hand, a more enduring progressive electoral majority definitely seems like it would be harder to forge on economic populism alone, barring a return of the Great Depression.

Key points:

-- Although it salves the wounds of defeat to conceptualize the majority of Bush-voters as hoodwinked into voting against their economic interests, the truth is the bulk of Americans are simply too well-off to benefit from the economic programs that Democrats are pushing for. It's terrible for the 20% in this country that are uninsured. But this necessarily means that the majority of voters in this country does have health insurance.
-- In order to forge a sturdy coalition for progressive economic policies, Democrats would have to rely not on the individual self interests of voters, but a moral sense that helping the poor is the right thing to do.
-- We can argue that Bush is steering the country into inevitable economic trouble down the line with the deficit. But Americans have gotten used to living with deep federal deficits, and tend to ignore them as long as growth stays high and interest rates stay low.

It goes without saying that I still think that single-payer health care, a stronger social safety net etc. etc. are better policies. But I think it's clear that it is futile to pretend they always have short-term economic benefits for most Americans. So, what's the way forward? I'm still thinking...