It hasn't, and it's not the liberal wing that's the problem. I'm in the liberal wing and I'm by far not the most left wing person in the party. It's the progressive/whacko fringe wing that is a very vocal minority. The rest of us are over here voting for Hillary.
Now the Republicans on the other hand, they're getting ready to nominate the second coming of George Wallace for the exact same reasons.
You're right, it hasn't gone to the left. Not all of it anyway. Many Democrats are becoming more liberal, especially on social issues, but that "progressive" is a dirty word instead of an accolade to you shows how far right the Democrats have become.
The OP is wrong. Third way Democrats were created to bash those damn dirty progressives and New Deal Democrats because of the major losses of McGovern, Carter, and Mondale (and to a lesser degree, Dukakis). The party may be going further left, the elected officials are not.