Markos Moulitsas offers the following definition (in part) for a libertarian Democrat. These are the points where he believes his notional libertarian Democrat parts ways with actual libertarians:
A Libertarian Dem believes that true liberty requires freedom of movement — we need roads and public transportation to give people freedom to travel wherever they might want.
Libertarians are not, of course, against roads, although there's a large body of libertarian literature in favor of privatizing roadways. I suspect that Kos is playing coy here: roads are less the issue than Amtrak and other public-transit scams. (As someone who takes Amtrak several times I year, I'm prepared to say it is indeed a scam. This Peter Bagge cartoon gets it exactly right, and my experiences are rather the worse for riding coach rather than first class.)
A Libertarian Dem believes that we should have the freedom to enjoy the outdoor without getting poisoned; that corporate polluters infringe on our rights and should be checked.
Again, I think Kos is saying rather less than he means: libertarians are not pro-poisoning, no more than anybody else is. Pollution leading to health and property damage is aggression, after all.
A Libertarian Dem believes that people should have the freedom to make a living without being unduly exploited by employers.
A "living wage" perhaps?
A Libertarian Dem understands that no one enjoys true liberty if they constantly fear for their lives, so strong crime and poverty prevention programs can create a safe environment for the pursuit of happiness.
A mix of Rudy Giuliani and LBJ — that's libertarian?
A Libertarian Dem gets that no one is truly free if they fear for their health, so social net programs are important to allow individuals to continue to live happily into their old age. Same with health care. And so on.
Perhaps Hillary Clinton was the first libertarian Democrat. The whole program sounds like Clinton-Gore warmed over, in fact. Even the bland rhetoric earlier in Kos's piece about how government is not the solution to every problem sounds a lot like "the era of big government is over."
Kos may be correct that candidates like Paul Hackett and Jim Webb point toward a new, more libertarian kind of Democrat, though that remains to be seen. Even if that's so, however, and even acknowledging the massive amount of traffic the Daily Kos receives, I still don't see anything like a movement here. So far, netroots have not performed well at all against the Democratic Party establishment — ask Hackett, or look at Howard Dean's performance in the 2004 primaries. (The New Left, by contrast, may not have been able to nominate Eugene McCarthy, but it was able to torpedo LBJ. Kerry, it seems to me, never had much to fear from the Kossacks.)