Good question. While we call our system a "democracy", it is important to distinguish it from democracy in its original form, which was that present in ancient Athens. It was a power made up of the demos, that is, "the people". This was a direct democracy, meaning that each citizen took their turn playing a role in government. In Athens this assembly, called the ekklesia, was the dominant power. By contrast, we have a representative democracy, meaning that we elect people to make decisions on our behalf who must use their own judgement of what is best and not simply report what is the will of their constituents. There is still another distinguishing feature of our democracy, which gets to your question about whether it is truly a democracy or an oligarchy. Ours would be called a "mixed regime", meaning that it has elements of monarchy, aristocracy, and democracy. The advantage of the mixed regime is that it is more stable than any of the pure forms on their own, which can easily devolve into their corrupted forms (monarchy to tyranny, aristocracy to oligarchy, and democracy to mob rule). What this means for us, and for your question more specifically, is that yes this is a democracy but is is also, in some ways, an aristocracy. I say aristocracy rather than oligarchy. Why is this? You are right to identify the rule of a few (oligos in Greek means "litte" or "few") with oligarchy, yet the classical political philosophers distinguished between two kinds of rule by the few. One was its best form and the other its worst. The worst kind is oligarchy, rule by the few based on wealth. Aristocracy is rule by the few based on human excellence. This is what the senate aspires to be. Now it is another question altogether whether our public officials are exemplars of human virtue.
