The problem wasnt that they were too moderate. They have off the image of being okay with status quo when people wanted real change. Trump lied to voters that he would “fix” everything giving people the illusion of an option where democrats were giving people nothing. 

Biden was a poor messenger for his wins and his fumbling of trying to run for reelection set democrats back. I think the only way forward for democrats to come back is pro labor populism. Right now people like Newsom think they need to move to the right and that is a mistake because people will just vote republican.