The landslide 1984 Presidential election defeat spurred centrist democrats to action, and the Democratic Leadership Council (DLC) was formed. The DLC, an unofficial party organization played a critical role in moving the Democratic Party’s policies to the center of the political spectrum. Prominent Democratic politicians such as former Vice President Al Gore, Vice President Joseph Biden participated in DLC affairs prior to their candidacy for the 1988 Democratic nomination.
The DLC espoused policies that moved the Democratic Party to the center. However, the DLC did not want the Democratic Party to be “simply posturing in the middle.” Thus, the DLC declared their ideas to be “progressive”, and a third way to address the problems of the 1990s. Examples of the DLC’s policy initiatives can be found in The New American Choice Resolutions
Although the label "New Democrat" was briefly used by a progressive reformist group including Gary Hart and Eugene McCarthy in 1989, the term became more widely associated with the policies of the Democratic Leadership Council, who in 1990 renamed their bi-monthly magazine from The Mainstream Democrat to The New Democrat. When then Arkansas Governor Bill Clinton stepped down as DLC chairman to run for president in the 1992 presidential election, he presented himself as a "New Democrat".
The first-wave of New Democrats, from the 1980s to 1990s, were very similar to Southern and WesternBlue Dog Democrats. Al From, the founder of the Democratic Leadership Council (DLC) and its leader until 2009, had been a staffer for Willis Long, a Democratic representative from Louisiana. Among the presidents of the DLC were Al Gore, senator from Tennessee, and Bill Clinton, governor of Arkansas. The first-wave New Democrats sought the votes of white working-class Reagan Democrats.
On March 10, 2009, Barack Obama, in a meeting with the New Democrat Coalition, told them that he was a "New Democrat", "pro-growth Democrat", "supports free and fair trade", and "very concerned about a return to protectionism."
As presidents, Bill Clinton and Barack Obama both reflected the priorities of the second New Democrat coalition, uniting donors from Wall Street, Hollywood, and Silicon Valley with a “new majority” coalition of racial minorities, immigrants, liberalwomen, and young voters. Because Democratic voters are disproportionately poor, this has produced a Democratic Party that, in economic terms, is an hourglass coalition of the top and the bottom. Economic populism frightens the party’s billionaire donors, while social populism, which has often been associated with white working-class xenophobia, racism and religiosity, frightens blacks, Latinos, immigrants and white social liberals. The result is what Mike Konczal and others have called “pity-charity” liberalism — a kind of liberalism that appeals to the sympathy of the rich for the poor, rather than appealing, as the New Deal did, to solidarity among the middling majority.
"In the 1968 Indiana primary, Bobby Kennedy became the first New Democrat. He believed in civil rights for all and special privileges for none, in giving poor people a hand up rather than a handout: work was better than welfare. He understood in a visceral way that progressive politics requires the advocacy of both new policies and fundamental values, both far-reaching change and social stability. If he had become President, America's journey through the rest of the twentieth century would have been very different."
Bill Clinton presented himself as a centrist candidate to draw white, middle-class voters who had left the Democratic Party for the Republican Party. In 1990, Bill Clinton became the DLC chair. Under his leadership, the DLC founded two-dozen DLC chapters and created a base of support. In 1989, there were 219 DLC members. By the spring of 1992, there were 700.
During the 1992 and 1996 Presidential elections, Clinton ran as a “New Democrat.” However, based on voters’ perception of Clinton’s positions on an ideological scale, he was perceived to be just as liberal as 1988 Democratic nominee Michael Dukakis was in 1988. Thus, the Democratic Party’s success based on the New Democratic moniker is inconclusive. 
An important part of New Democrat ideas is focused on improving the economy. During the administration of Bill Clinton, New Democrats were responsible for passing the Omnibus Budget Reconciliation Act of 1993. It raised taxes on the wealthiest 1.2% of taxpayers, while cutting taxes on 15 million low-income families and making tax cuts available to 90% of small businesses. Additionally, it mandated that the budget be balanced over a number of years, through the implementation of spending restraints. This helped oversee the longest peace-timeeconomic expansion in the United States' history. Overall, the top marginal tax rate was raised from 31% to 40% under the Clinton administration.
Many on the left criticize New Democrats. Leftists argue that New Democrats' supposedly ideological "centrism" and "Third Way" postions were nothing more than neo-liberal and right-wing ideologies being re-branded as "moderate."