My guess is that the "insanity" the Democrat establishment is most concerned about repeating is what happened in the 1972 Presidential election. The Democratic nominee was George McGovern - probably the most "liberal" candidate in US history. This map shows the result.
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In contrast, Hillary Clinton won the popular vote by a significant margin. Had she carried the states of Pennsylvania, Michigan & Wisconsin - which she lost by somewhere between a half & one percent of the vote -she would have won the election by a comfortable margin. I'm pretty convinced that had
Biden been the Democratic candidate he would have carried those three states easily against Trump.
The dilemma facing the Democratic party is whether to focus on getting out the Democratic base by promoting a more left-wing candidate, or to attract the votes of independents by nominating a more centrist candidate. Trump seems to have made no attempt to court moderates, so it would be a logical move on the part of the Democrats to step in & try & capture the vote of independent moderates. In addition to that, activist Democrats may chafe at the idea of another centrist Democrat candidate, but I wonder if they may have been somewhat sobered by the unexpected election of Trump & may be more likely to suck it up & support a centrist Democrat to ensure Trump does not get re-elected?
That's the way I see it. Add a suitable, more left VP & you've covered the bases. However, anything could happen through the primaries & it's possible a strong, younger, more appealing candidate may emerge ...