the Dem Party is bad because they are too timid to actually stand up to the status quo despite having vastly superior policy.

It's more complicated than that. Even more complicated than the other guy said. But the most basic description is that Republicans have controlled the narrative since Reagan and they've moved the Overton Window.

In today's vernacular, liberal means left-wing but still wishing to preserve the capitalist economic system, whereas neoliberalism is basically Reaganism.

No. In today's vernacular, liberal means Modern Liberal, which doesn't really indicate any specific economic position, but is strong on Liberty and free speech. Neoliberalism, OTOH, is what you called "liberal" and it stretches across the political aisle. Clinton and Tony Blair were Neoliberals, although they claimed to support stronger safety nets and called themselves "Third-Way" proponents. The thing with Neoliberalism is that it always claims to support safety nets, but never supports it in action.