Democrats jumped there headfirst led by Clinton in 1992, and have not, since then, been any farther out of a “neoliberal corner” than they are today (which is not that far, to be sure, but its absolutely not the case that its something they recently backed into in response to Trump.)
Social issues are really the only thing where the party is unified and can push through changes, especially through the administrative state. We didn’t get a permanent child tax credit, or paid family leave, but we did get abortions and DEI in the military.
Just look at the electoral map. Obama beat Romney by about the same margin as Biden beat Trump. But Obama’s margin in Michigan was 10 points, while Biden’s was 3. Obama’s 7 point margin in Wisconsin evaporates to 1 point.
Where did those other votes come from? To a significant degree, it was from affluent suburbs were the management class lives. Democrats now are utterly reliant on the very people they need to heavily tax to deliver any of their progressive promises. You can’t have a meaningful liberal party which counts among its base Silicon Valley, Wall Street, and Fortune 500 and Big Pharma executives.
The GOP has won a near complete victory. It can pick its fights on cultural issues. But win or lose, the worst thing that can happen is that the Democratic Party governs like Rockefeller Republicans. It must govern in a way that keeps Wall Street and Silicon Valley happy. It can’t roll back Reagan’s tax cuts on the upper middle class. In fact Biden preemptively ruled out any tax increases on people in the top 2%. Biden couldn’t even roll back Trump’s corporate tax cuts. It couldn’t extend the child tax credits. Y’all are excited about infrastructure investment, but that’s always been something liberal Republicans have entertained.