Beginning in the early 1980s, the Reagan administration and Thatcher government implemented a series of neoliberal economic reforms to counter the chronic stagflation the United States and United Kingdom had each experienced throughout the 1970s. Neoliberal policies continued to dominate American and British politics until the Great Recession.

This trend continued into the 1980s under the Reagan administration, which included tax cuts, increased defense spending, financial deregulation and trade deficit expansion.

Democrats flirted with neoliberalism until the Great Recession. Even as they did, their “New Democrat” policies retained a mixed economy social market while stressing civil rights.

Arkansas governor Bill Clinton was one such figure, who was elected president in 1992 as the Democratic nominee. The Democratic Leadership Council was a campaign organization connected to Clinton that advocated a realignment and triangulation under the re-branded “New Democrat” label. The party adopted a synthesis of neoliberal economic policies with cultural liberalism, with the voter base after Reagan having shifted considerably to the right. In an effort to appeal both to liberals and to fiscal conservatives, Democrats began to advocate for a balanced budget and market economy tempered by government intervention (mixed economy), along with a continued emphasis on social justice and affirmative action.

It was a brief shift away from their relatively longer history of modern American liberalism tracing back from the New Deal through the New Frontier and Great Society.

Into the 21st century, the liberal faction represents the modern American liberalism that began with the New Deal in the 1930s and continued with both the New Frontier and Great Society in the 1960s. The moderate faction supports Third Way politics that includes center-left social policies and centrist fiscal policies, mostly associated with the New Democrats and Clintonism of the 1990s, while the left-wing faction (known as progressives) advocates for progressivism and social democracy.

That modern liberal faction remained through the dominance of the neoliberal-leaning New Democrats

While the resurgence of conservatism and the Third Way of Bill Clinton’s New Democrats briefly weakened the influence of modern liberalism, Barack Obama acted as an ideological bridge.

and neoliberal decline with the Great Recession and Obama administration.

Moderate Democrats, or New Democrats, are an ideologically centrist faction within the Democratic Party that emerged after the victory of Republican George H. W. Bush in the 1988 presidential election. Running as a New Democrat, Bill Clinton won the 1992 and 1996 presidential elections. They are an economically liberal and “Third Way” faction that dominated the party for around 20 years, until the beginning of Obama’s presidency.

Since then, neoliberalism has been waning as liberals & progressives restored market regulation with the Dodd–Frank financial reform act, intervened in healthcare & expanded medicaid with the Affordable Care Act, and led Democrats to adopt an increasingly progressive economic agenda during the Biden administration.