I have touched on this subject before:

I'll talk more about Meyerson's cans and can'ts, but if I may, it seems to me that what Markos is attempting is a packaging of New Deal policies in attractive garb for those who consider themselves libertarian in outlook. In that sense, I think Markos' exercise is a valuable one. And to consider it an academic discussion of libertarianism is to miss the point. . . . Let me say that I think Meyerson's last line is overstating a great deal. And he misses what was, indeed IS, at the heart of liberalism - pragmatism. Yes, pragmatism. For what defines a liberal is not the program or policy that is implemented, but rather the result reached. Indeed, it becomes, in some cases, a fatal flaw. Consider the romance with left wing totalitarian regimes like the former Soviet Union prior to 1950 and the continuing romance with Castro's Cuba. We lliberal love our goals - equality, egalitarianism, economic and racial justice and where our goals our mouthed by an ideology, we are more tolerant. We should not be.

To me liberalism can and does embrace economic libertararianism where it meets the goals of liberalism. We are pragmatic. If social justice and economic equality could be reached be cuts in the estate tax, we liberals would support it. We oppose it because it does exactly the opposite.

Thus when Meyerson writes:

[T]he need for a state that takes the burden of economic and health security off employers who won't pick it up and employees who can't pick it up is increasingly urgent. It's hard to predict what exactly the tipping point will be as our private-sector welfare state continues to contract. But at some point, the Democrats will embrace a decisively larger role for the state in these matters because the public will demand it--not because the public will suddenly identify itself as liberal, but because there will be nowhere else to turn.

I can agree with him because I believe that, pragmatically speaking, the best policy to achieve the liberal result will likely embrace what he describes. But that does not mean that the state will or should intervene in a sweeping fashion in our economy. There are lessons history has taught us, and one of them is the less government intervention in the economy, the better the economic performance. Liberals seek to strike a balance between the efficiency of the market and the important objectives of social and economic justice - not just because these goals are "good," but because they are essential to the well being of the country.

And in the end, Meyerson understands the important role of pragmatism for liberals:

Ultimately, the Democrats aren't going to proceed very far down the libertarian road, for one simple reason that's far more pragmatic than philosophic: It doesn't lead anywhere.

And it will be this pragmatism that leads liberals to not seek a statist solution to all of our ills. Because the statist road also does not lead anywhere.

Pragmatism is what liberalism and the New Deal were about policy-wise. Here is DeLong describing Krugman's views:

Paul, I think, believes otherwise: The events of the past decade and a half have convinced him, I think, that people like me are hopelessly naive, and that the Democratic coalition is the only place where reality-based discourse is possible. Thus, in his view, the best road forward to (a) make the Democratic coalition politically dominant through aggressive populism, and then (b) to argue for pragmatic reality-based technocratic rather than idealistic fantasy-based ideological policies within the Democratic coalition.

As I state in that post, what Krugman is describing is FDR New Deal liberalism, both its policies and politics. I think that is what being a liberal means. It does not mean ideological purity or political ingenuousness. The opposite.

Thus, while the "negotiations" our Lefty wonks are carrying out with the Libertarians is interesting, it is beside the point. A Dem political appeal to Libertarians will highlight those aspects of Democratic values that appeal to libertarian leaners and stress our pragmatism on policy issues.