Just because you can raze entire cities, displace their populations, and embark on "clean slate" urban planning projects doesn't mean you should. That's the civil engineering equivalent of rewriting the entire codebase from scratch.
And yet, "refactoring" is definitely a real thing in software engineering and is not uncommon, for good reason: many times you really do need to throw everything out and start from scratch.
Don't build new roads to the core, maybe even take out, restrict, or slap huge tolls on the existing roads, and you'll keep people from wanting to commute in by car. Also remove rules requiring parking spaces, and even encourage replacing parking lots with buildings or parks or anything else, to make car driving the most miserable experience it can possibly be
There's lots a government can do to make people stop driving cars so much, and stop moving out to the suburbs. There just isn't political will (in America) to do so.
It is hard, but it's mostly hard due to a population of motorists who have confused the privileges granted to them by the state with rights.