I also think that Democrats really don't like to govern because it makes them feel exposed. They have prostituted themselves to business and adopted neo-liberal principles, but they have to pretend that they are representing working people and the poor.
Well, there's your problem right there.
If you really want your heart broken, read FDR's first or second second inaugural addresses or virtually any utterance of Harry S Truman (the ones about economics, anyway) and then compare and contrast with the current Clusterfuck That Is The Democratic Party.
I suspect a lot of this goes back to the way the left split in the late sixties; blue collar and union guys vs. the "New Left" college radicals. That split has consistently and only served one constituency well, really; the rich. It is worth remembering that the central, core, consensus issues that have united the left's most dominant constituency (the New Deal coalition) were economic in character.
The consensus left position was simple, and went like this: It is legitimate and necessary to use the power of the central government (through progressive taxation, income redistribution and support for labor) to restrain the tendency of big business to concentrate wealth in the hands of the elite few, and thus provide social and economic stability.
Everything else needs to flow from that crucial, central, distictive-to-the-left premise - and when it does, suddenly the national conversation starts to change. The Republican Party says we need tax cuts to stimulate the economy; the Democrats point out that the Republicans have been trying that for years, and really just want to give more money to their rich friends and weaken the government's ability to stick up for working folks, but we Democrats want to pass a big jobs bill to give our constituency, ordinary Joes and Janes, a chance to practice their legendary work ethic and provide a nice life for their children.
In short, I and Digby and (to some extent) Paul Kruigman and others have been calling for the Democratic Party to take the golden opportunity of the current crisis to break out the economic populist rhetoric to sell economic populist policies.
This would seem to be an obvious and winning strategy that could plausibly lead to a couple generations of electoral and ideological dominance. So, why are we not seeing it?
What has happened is that the Democratic Party leadership has become corrupted by proximity and fealty to the wealth and power of our economic elites. Incrementalism and pressuring the current bunch has not worked, because they are too corrupted; we need new and better leadership. It's time to clean house. The leadership has failed us. It's time to acknowledge that and replace them.