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New Democrats, also called Centrist Democrats, Clinton Democrats or Moderate Democrats, is an ideologically centrist faction within the Democratic Party that emerged after the victory of Republican George H. W. Bush in the 1988 presidential election. They are an economically conservative and "Third Way" faction which dominated the party for around 20 years starting in the late 1980s after the US populace turned much further to the political right. They are represented by organizations such as the New Democrat Network and the New Democrat Coalition.
After the landslide electoral losses to Ronald Reagan in the 1980s, a group of prominent Democrats began to believe their party was out of touch and in need of a radical shift in economic policy and ideas of governance. The Democratic Leadership Council (DLC) was founded in 1985 by Al From and a group of like-minded politicians and strategists. They advocated a political "Third Way" as an antidote to the electoral successes of Reaganism.
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 Western Blue 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.
The second-wave of New Democrats, from 1990s to present, came into existence after the 1994 election. After 1994, the Democrats were much more dominated by urban areas, minorities and white social liberals. The New Democrats shifted from the South to Wall Street.
During the presidency of George W. Bush, the evolving New Democrat or “economically liberal” movement was dominated by socially liberal economic conservatives in Wall Street, Hollywood, and Silicon Valley. These centrist Democrats abandoned white working-class Southerners and Westerners and focused instead on winning over former moderate Republicans in the Northeast, Midwest, and West Coast who combined liberal attitudes on abortion, LGBT rights, and environmentalism, with opposition to “big government” and concern about federal deficits. In 2008, many Wall Street Democratic donors abandoned Hillary Clinton and supported Barack Obama for president.
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, liberal women, 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 was the single Democratic politician of the 1990s most identified with the New Democrats; his promise of welfare reform in the 1992 presidential campaign, and its subsequent enactment, epitomized the New Democrat position, as did his 1992 promise of a middle class tax cut and his 1993 expansion of the Earned Income Tax Credit for the working poor. New Democrat and Third Way successes under Clinton, and the writings of Anthony Giddens, are often regarded to have inspired Tony Blair in the United Kingdom and his policies.
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. 
New Democrats were more open to deregulation than the previous Democratic leadership had been. This was especially evident in the large scale deregulation of agriculture and the telecommunications industries. The New Democrats and allies on the DLC were responsible for the ratification of the North American Free Trade Agreement (NAFTA).
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-time economic expansion in the United States' history. Overall, the top marginal tax rate was raised from 31% to 40% under the Clinton administration.
Michael Lind argues that neoliberalism for New Democrats was the highest stage of left liberalism. The counterculture youth of the 1960s matured in the 1970s and 1980s to become more economically conservative, but retain their social liberalism. Many leading New Democrats, such as Bill Clinton, started out in the George McGovern wing of the Democratic Party and gradually moved toward the right on economic and military policy, but did not reach out to a disposed white working class.
Many on the left criticize New Democrats. Leftists argue that New Democrats' supposedly ideological "centrism" and "Third Way" positions were nothing more than economically liberal and right-wing ideologies being re-branded as "moderate".