It’s issue-specific, I think, and hard to judge because the center (as judged by the people, but also as defined by the party/government elites, who don’t necessarily embody the people’s views) won’t stay still.
Defense: it’s an open question whether the threats the U.S. faces now are the same, or the same in magnitude, as in the 1970s-'80s. Looking at Clinton and his nation-building frolics (including the Kosovo adventure), and seeing how tamely most Dems. lined up behind Bush/Wolfowitz’s Iraq escapade, I’d say that either (1) they’re tired of being branded of wusses, so Dems. will be militarist-for-militarism’s sake before they’ll be avowed pacifists; or (2) with the demise of the socialist USSR, and the increase in do-gooder humanitarian missions administered through student-council like multilateral bodies, the Dems. may just naturally have begun to find the new breed of war more congenial to their sensibilities, especially if it can be pitched (as most wars can, coincidentally) as in aid of “tolerance” or “saving persecuted minorities.” Overall, don’t think they’ve moved too far left, if at all.
Taxes: Raising taxes on the “very rich” is class warfare, of course, but the Dems. have engaged in class warfare for years. Clinton raised taxes and that may have hurt him and Gore, but the fed. tax burden is so high (and so unlikely to ever retreat to a modest portion of the GDP) that I’m not sure tweaking the marginal rate up or down by three points (Clinton and Bush, respectively) is a deal-breaker. The govt. (Dems. and Republicans both) have gotten very good at disguising tax raises rather than proposing an across-the-board hike in marginal rates. How much easier just to silently subject increasing number of “fat cats” to the AMT, sub silentio, because it’s minimum level isn’t inflation indexed, or to phase out deductions and thus make the nominal “top” marginal rate lower than the effective rate actually paid by many taxpayers. And economic boom times allow government to collect hugely-increased taxes without appearing to “raise taxes” at all, which is what the Dems. did under Clinton. I think the Dems. will tax you more, but then you always knew that, and I don’t know how much worse it’s getting.
Spending: Well, both parties are now spending like drunken sailors, so I don’t think the GOP’s going to kill the Dems. anytime soon with ads predicated on fiscal prudence. It’s not just the war; GWB’s intentness on interfering in non-federal issues such as education means he’s committing to federal funding for them, and Bush increased NEA funding. Moreover, as with taxes, increasingly when we look at the past vs. today, it’s apples and oranges. The Dems. have backed off their stalwart advocacy of welfare, which in my eyes makes them look superficially less-left. But then you realize that the reduction in direct AFDC payments doesn’t mean a reduction in overall government spending, as we’ve seen the proliferation of multiple quasi-welfare programs (SSI, Medicaid, Section 8, the EITC, Pell Grants) that provide multiple avenues for covert expenditures of govt. money a/k/a vote buying. The GOP is guilty of this too, bigtime, so I’m not sure that even if the Dems. were called on this issue, it would be a net disadvantage to them.
Social Issues: Here’s the only place I see the Dems. moving substantially to the left of the populace, at least more left than they used to be. Many Americans are anti-abortion. Some Dem. leaders used to be; now, it’s anathema for anyone who wants to advance in the Dem. leadership (ask Al Gore and Tom Daschle, whose agonizing flip-flops away from their previous statements spoke volumes). I don’t know what the numbers are on affirmative action, but I suspect the Dems. party line on this issue is substantially to the left of the majority of Americans. To the extent the Dems. are seen as more pro-homosexual, that hasn’t helped them. I sort of do concur with Donna Brazile that, for better or worse, the Dems. have hitched their wagon to (or rather, given an oath of never deviating from the pet policies of) the “four pillars” of their constituency as she characterized it (she actually listed more than four, but it was women, blacks, labor, minorities, environmentalists, and homosexuals).
It could thus be true that the party itself hasn’t moved, on net, to the left, but has allied itself with a limited number of high-profile wedge issues advanced by its biggest supporters that don’t resonate well with lots of swing voters.