As Orin points out below, Drudge is highlighting excerpts of a 2001 interview Barack Obama did with Chicago public radio, in which he advocated "redistributive change." The context was a discussion of the Supreme Court and constitutional law.
Before getting to the controversy, the whole interview is worth listening to for another reason: Obama gives a very impressive performance as a constitutional scholar. Even though he was holding down other jobs while teaching at Chicago, he clearly had thought a lot about constitutional history, and how social change is or is not brought about through the courts. Among other things, I was impressed that rather than accept the rather cartoonish view that often prevails about the practical significance of Brown v. Board of Education, he knew that very few black students in the South were attending integrated schools as late as the early 1960s (almost a decade after Brown), and that it was only the threat of a cutoff of federal funds that really got desegregation moving. Being realistic about the practical effect of Brown is heresy in some circles, but Obama is correct. Relatedly, Obama was clearly influenced by Rosenberg/Klarman thesis that the Supreme Court rarely diverges much from social consensus, and can't be expected to.
On the issue of whether Obama endorses redistribution of wealth through the courts, it certainly sounds to me like he thinks the Rodriguez case (holding 5-4 that unequal funding of public schools does not violate the Equal Protection Clause) was wrongly decided, and that state courts that have mandated equal funding for public schools are correct. But he also seems to think that it was a huge error for activists to try to achieve more general redistribution through the Due Process Clause of the Fourteenth Amendment. (In the waning days of the Warren Court, there was a movement to try to constitutionalize a right to a minimum income.) Co-interviewee Dennis Hutchison even suggests that in pre-interview conversation, Obama agreed with him that Goldberg v. Kelley, establishing procedural protections for welfare recipients, was wrongly decided, or at least promised much more than it could possibly achieve.
Based on this interview, it seems unlikely that Obama opposes constitutionalizing the redistributive agenda because he's an originalist, or otherwise endorses the Constitution as a "charter of negative liberties," though he explicitly recognizes that this is how the Constitution has been interpreted since the Founding. Rather, he seems to think that focusing on litigation distracts liberal activists from necessary political organizing, and that any radical victories they might manage to win from the courts would be unstable because those decisions wouldn't have public backing. The way to change judicial decisions, according to Obama, is to change the underlying political and social dynamics; changes in the law primarily follow changes in society, not vice versa. Again, he's channeling Rosenberg and Klarman. And this attitude on Obama's part shouldn't be surprising, given that he decided to go into politics rather than become a full-time University of Chicago constitutional law professor, as he was offered. Had he been committed to the idea that courts are at the forefront of social change, he would have been inclined to take a potentially very influential position at Chicago. (And judging from this interview, he would likely have been a great con law professor, both as a teacher and scholar, and, had he been so inclined, legal activist.)
All that said, there is no doubt from the interview that he supports "redistributive change," a phrase he uses at approximately the 41.20 mark in a context that makes it clear that he is endorsing the redistribution of wealth by the government through the political process.
What I don't understand is why this is surprising, or interesting enough to be headlining Drudge [UPDATE: Beyond the fact that Drudge's headline suggests, wrongly, that Obama states that the Supreme Court should have ordered the redistribution of income; as Orin says, his views on the subject, beyond that it was an error to promote this agenda in historical context, are unclear.]. At least since the passage of the first peacetime federal income tax law about 120 years ago, redistribution of wealth has been a (maybe the) primary item on the left populist/progressive/liberal agenda, and has been implicitly accepted to some extent by all but the most libertarian Republicans as well. Barack Obama is undoubtedly liberal, and his background is in political community organizing in poor communities. Is it supposed to be a great revelation that Obama would like to see wealth more "fairly" distributed than it is currently?
It's true that most Americans, when asked by pollsters, think that it's emphatically not the government's job to redistribute wealth. But are people so stupid as to not recognize that when politicians talk about a "right to health care," or "equalizing educational opportunities," or "making the rich pay a fair share of taxes," or "ensuring that all Americans have the means to go to college," and so forth and so on, that they are advocating the redistribution of wealth? Is it okay for a politician to talk about the redistribution of wealth only so long as you don't actually use phrases such as "redistribution" or "spreading the wealth," in which case he suddenly becomes "socialist"? If so, then American political discourse, which I never thought to be especially elevated, is in even a worse state than I thought.
UPDATE: At Overlaywered, Walter Olson and Ted Frank (in the comments) talk about how all this might impact Obama judicial nominations. There are two basic possibilities. One is that Obama might believe that appointing far left Justices to the Court would be unlikely to accomplish much in the long-term, and could ultimately harm the progressive agenda, and his own presidency, by reviving "unelected judges imposing their will on the American people" as a Republican campaign theme. The other possibility is that Obama, intoxicated by victory, and having the very healthy ego that all successful politicians have, will decide that the election of a very liberal African-American president, along with large Democratic majorities in the House and Senate, signals that the social and political winds have shifted sufficiently that the Supreme Court could successfully launch an activist liberal agenda, and he will nominate justices accordingly. But there is nothing in either Obama's radio remarks, his voting record in the Senate, or his public statements on judges to suggest that he objects in principle to the equalitarian "living Constitution" of Brennan, Warren, et al., and there is much to the contrary.
FURTHER UPDATE: Obama advisor Cass Sunstein tells Politico's Ben Smith that Obama wasn't referring to redistribution of wealth in general,but "to the narrower forms of redistribution -- education, legal filing fees, legal representation, and other issues --that had been discussed in the case Obama cited and in discussions around it.
That's very hard to swallow, if one looks at the transcript.
If you look at the victories and failures of the civil rights movement and its litigation strategy in the court, I think where it succeeded was to vest formal rights in previously dispossessed peoples. So that I would now have the right to vote, I would now be able to sit at the lunch counter and order and as long as I could pay for it I'd be okay.
But the Supreme Court never ventured into the issues of redistribution of wealth and sort of more basic issues of political and economic justice in this society. And to that extent as radical as people tried to characterize the Warren court, it wasn't that radical. It didn't break free from the essential constraints that were placed by the founding fathers in the Constitution, at least as it's been interpreted, and the Warren court interpreted it in the same way that generally the Constitution is a charter of negative liberties. It says what the states can't do to you, it says what the federal government can't do to you, but it doesn't say what the federal government or the state government must do on your behalf. And that hasn't shifted. One of the I think tragedies of the civil rights movement was because the civil rights movement became so court focused, I think that there was a tendency to lose track of the political and community organizing and activities on the ground that are able to put together the actual coalitions of power through which you bring about redistributive change and in some ways we still suffer from that.
Later, a caller asks, "is it too late for that kind of reparative work, economically, and is that the appropriate place for reparative economic work to change place?"
Obama responds, "You know, I'm not optimistic about bringing about major redistributive change through the courts."