I think two realizations need to happen. One, as you said, but secondly and I think more importantly, Democrats need to realize and fully acknowledge their drift from the core fundamentals of what they think they represent, but also that the candidates they are putting up, are terrible. And I understand we have seen a shift in what has been promoted as education, with more people going into university because its shoved down your throat and you now have this young ideological base , but that has created a large drift from its working-class core to the point where people feel they had to flop, they felt underrepresented by the past democratic leadership who prioritized identity politics at times rather than class.
If we can get back to class representation and away from identity politics, I think you will see the democrats take the next election. The majority of people should be focused on class, there is extreme wealth inequality, and that inequality is only going to get worse on this current trajectory.
It's not so much that Democrats have drifted away from their core values; rather, they've simply been replaced by new ones. The same goes for their voters. If you look at the sort of people who come out and vote Democrat, it's not the working-class - it's the highly educated, credentialed class. And it's not as if this has happened in a vacuum, either; it's been moving in this direction for over 30 years. There's a chasm between what policies benefit working-class people and what the highly educated, high-income class wants. Why would we expect Democrats to begin pursuing policies and such that benefit the working class over their contemporary base?
I don't even have confidence that the, arguably revolutionary, DSA Democrats would pursue policies that benefit the working class. Their voters skew even more towards the highly-educated cohort. If I recall correctly, the only difference between the average Democrat voter's preference for establishment or DSA candidates is whether or not they're downwardly mobile. And even then, I think there are very different policy preferences between someone with a bachelor's degree working as a barista at Starbucks because their Sociology degree is useless, versus your average Joe. The Biden administration's attempt to forgive student loan debt is a fantastic example of this.
Of course, as the one Democratic strategist I've listened to on occasion has said, the Democrats can always do nothing and just hope Republicans fuck up so bad that people return to vote for them, which I think is a fine short-term strategy, but it certainly doesn't bode well for future cohesion.