In the first stage of the Obama administration, Democrats enacted an $862 billion economic stimulus package, financial regulatory legislation, and a national health care law that on its own was the most significant piece of liberal legislation since LBJ’s Great Society. You might expect self-described progressive activists to be beaming. But you’d be wrong.

“We delivered the U.S. Senate to the Democrats [in 2006],” Markos Moulitsas of the blog DailyKos proclaimed at July’s Netroots Nation, an annual gathering of liberals that he founded. “In 2008, we helped the Democrats expand that majority. Because remember, they didn’t have 60 votes. We still couldn’t do s**t. So we said, ‘Okay, here’s your Senate veto-proof majority.'”

By this he presumably meant filibuster-proof majority.

“And they still didn’t do s**t,” Moulitsas lamented.

The prominent liberal blogger made the remarks by way of introducing Montana Gov. Brian Schweitzer, who he suggested should challenge Sen. Max Baucus in the state’s 2012 Democratic Senate primary. Liberals hold Baucus in contempt because as Finance Committee Chairman he held talks with Republicans, a strategy that they blame for watering down the national health care law.

“We’ll do anything we can to get a Senate that has more Democrats who are real Democrats, and are not bulls**t Democrats,” Moulitsas pledged to the thousands of activists who had flocked to the Rio Hotel and Casino in Las Vegas for the conference.

For those unfamiliar with the term “bulls**t Democrats,” MSNBC talk show host Ed Schultz had hammered it home earlier in the evening.

“I know all of you on the campaign trail busted ass for Democrats,” Schultz hollered, clenched microphone in hand, pacing around the stage like a stand-up comic. “And I know you were told that all we need is 60 votes. Then you got introduced to Ben Nelson.”

The crowd booed loudly.

“Then you got introduced to Joe Lieberman.”

More boos.

“Let’s not forget Mary Landrieu.”

Another round of boos.

“And let’s not forget Blanche Lincoln.”

As the crowd continued to boo, Schultz screamed: “Bulls**t! Bulls**t!”

(The word also made its way into a slogan for the American Federation of State, County, and Municipal Employees, which is fighting back against what it says is misinformation about the burden public sector union employees are placing on states. The campaign is aptly titled: “STOP the Bulls**t!”)

Schultz’s critique of the Democrats extended all the way up to Obama himself.

“They must have a war room at the White House,” he mused. “I think they’ve got a sissy room, too.”

His gripe of the moment was that the Obama administration had ousted Shirley Sherrod, panicking after Andrew Breitbart had posted an edited video of her speaking that portrayed her as a racist. But a broader gripe was that President Obama didn’t give interviews to MSNBC in general and him in particular.

“I busted my ass for Obama,” he sadly recounted, like a jilted lover. “President Obama, he don’t come to Ed. He comes to Bret Baier on Fox News — in my time slot.”

He went on to proudly boast, “I thought our network did a hellavu job fighting for health care.”

Schultz challenged bloggers in the audience to hold Democrats and the White House accountable for their failures in advancing the progressive agenda, and urged them to use him as their inspiration.

“I have one message to all of you in the blogosphere: If I’ve got the balls to say it, you better have the balls to write it,” he goaded.

TO THE NETROOTS, weak-kneed Democrats have been standing in the way of the real change for which they campaigned. Gays still aren’t allowed to openly serve in the military. Gitmo hasn’t been closed. The U.S. is engaged in two wars, with an even larger commitment in one of them. There hasn’t been comprehensive immigration reform. Cap and trade died in the Senate. They didn’t get a public option into the health care law, and a single-payer, or fully government-run system, wasn’t even on the table. Though Obama signed stimulus legislation, it’s seen by liberals as insufficient to meet the magnitude of the economic downturn, and they’re disgusted by the renewed focus on deficits.

“Don’t accept the argument, any argument, about some financial limitations,” Van Jones, the former White House “green jobs czar,” advised the activists in a speech for which he received a standing ovation. “The limitation is not in our pocket book. The limitation is in our hearts. And our hearts can grow. And your job is to grow our hearts…. Don’t fall into the trap of this whole deficit argument. There is plenty of money out there. The only question: is how are we going to spend it?”

Jones was forced to resign from the administration last September following a series of revelations about his radical past, including the fact that he signed a petition calling for an investigation into whether the Bush administration knew about the September 11 attacks and deliberately allowed them to happen. (Jones has insisted that the group organizing the petition added his name without proper consent, and it has since been removed from the petition.)

In his speech, Jones said that following his resignation, he “spent about six months throwing myself the biggest, longest pity party you could ever imagine.” He tied his struggle to the larger struggle facing the progressive movement and the country as a whole.

“These are the days of hope and heartache, all across the country,” he said. Yet he ultimately urged liberals to cut Obama some slack.

WHEN TAKING A BREAK, attendees could roam through the exhibition hall, filled with booths of various liberal activist groups, Democratic candidates courting progressives, and some business ventures. One booth sold vegan-friendly soap, bath and body products, as well as a collection of Republican voodoo dolls. When I swung by, Sarah Palin’s mouth was the most popular target for pins.

Most of the conference was devoted to smaller panel discussions about blogging, online activism, and policy, with blasting air conditioning shielding the environmentally conscious attendees from the 111-degree Vegas heat. Upon registering, attendees were given a grid with a schedule of dozens of options, with topics including: “Tweeting the Revolution,” “Overcoming Organizational Resistance to Change,” and “California’s Challenge: From ‘Failifornia’ To Progressive Laboratory.” While many people would look at the crisis in the Golden State as a textbook example of what happens when high taxes, excessive regulation, a generous welfare state, and powerful public sector unions run amok, this panel sought to argue that this was actually the perfect time for the state to experiment with liberal policies.

Another panel titled, “Can Unconscious Bias Derail the Progressive Agenda?” explored how even people who were not explicitly racist still harbor unconscious racial anxieties that savvy political operatives tap into for partisan gain. McCain ’08 ads fed into this sort of unconscious racism, according to one panelist, who argued that McCain’s ads attacking Obama’s inexperience exploited white fears of the “uppity” black man. Democrats are generally too afraid to talk about race, the panelists argued, but combating such unconscious bias would require identifying it publicly to bring it to the surface.

John Powell, a professor of civil rights at the University of Minnesota Law School, argued that Obama in particular has run away from anything having to do with race, for fear of being seen as the president for black people.

THROUGHOUT THE CONFERENCE, speakers mocked and attacked the most hated figures and institutions on the right: Fox News, Sarah Palin, Rush Limbaugh, Andrew Breitbart, Michelle Bachmann, and Glenn Beck.

“I’m really sorry that Glenn Beck is going blind,” Schultz remarked, eliciting laughter in some parts of the audience. “Because I think it’s a travesty he’s not going to see the country he’s trying to destroy.”

But the most popular target for progressives wasn’t a specific individual or institution, but a nascent political movement — the dreaded “teabaggers.”

 While there was general agreement with the sentiment that the Tea Party movement represented the tantrum of a racist, paranoid fringe that now finds itself out of power, there were conflicting views as to whether the movement posed a political threat. Some expect the Tea Partiers to damage the Republican Party by moving it too far to the right, yet one could also sense a concern that the movement could exploit economic anxiety to advance conservatism and undermine progressive policies, especially those that rely heavily on deficit spending.

Moulitsas called Senate Majority Leader Harry Reid the “luckiest sonavabitch in politics” for drawing Tea Party favorite Sharron Angle as his Republican opponent.

“Thank you, teabaggers,” he taunted, imploring the audience to repeat the barb. He went on to mention Rand Paul of Kentucky and Linda McMahon of Connecticut as two other examples of Tea Party activists forcing Republicans to nominate extreme candidates who hurt the GOP’s chances. “Thank you, teabaggers,” the audience shouted back at him each time.

“They are the best thing to happen to us this year, I swear to God.” he said. “If you want motivation for November, it ain’t the Democrats. I’ll say it right now, they’re not motivating me. What’s motivating me is breaking the teabaggers.”

He went on to explain what it would mean to “break” them.

“What’s going to happen is that they’re not going to win the victories they think they’re going to win,” he predicted. “It’s going to break them, because it’s going to be all out civil war. They’re going to claim that the Republicans weren’t conservative enough. And Republicans are going to say, “You guys are bat s*** insane, you f***ed us this year.'”

Yet behind all of the triumphalism, one could sense a growing fear that the Tea Party movement would be a way for Republicans to benefit from the populist backlash against Washington. One panel examined “Right Wing Populism and the Tea Parties” while another looked at “2010 Elections: Channeling the Power of Jobs, Populism & Angry Voters.” The latter panel looked at ways that the weak economy could be used to the benefit of progressives, and the answers were heavy on protectionism. The idea was to convince Democrats to talk about bringing manufacturing jobs back to America as a cultural issue, while attacking Republicans for supporting tax cuts and trade policies that ship jobs overseas. Scott Paul, the executive director for the Alliance for American Manufacturing spoke about his group’s “Keep It Made in America” initiative.

During the question-and-answer session, one audience member asked, “Can anything turn around the economy other than massive government spending?” (Consensus answer: no.) Another member of the audience followed up by emphasizing that Democrats needed to create more projects like Franklin D. Roosevelt’s Works Progress Administration. “When are we going to stop worrying about what the Tea Party is going to say, and just do what we need to do?” he shouted with frustration.

THE SPEECHES FROM the top elected Democrats at the conference made it clear that there is at least some concern that a demoralized base could cost them in November. Obama himself felt compelled to address the audience through a video message.

He conceded that “Change has not come fast enough for too many Americans, I know that,” and continued: “It hasn’t come fast enough for me either. And I know it hasn’t come fast enough for many of you who fought so hard during the election. The fact is, it took years to get here. It’ll take time to get us out. We’ve known that since the beginning of our campaign. But I hope you take a moment to consider all that we’ve accomplished.”

The video then cut to a clip from The Rachel Maddow Show in which the MSNBC host recounted all of the legislation Obama had signed over his first year and a half in office. “So in ways large and small, we’ve begun to deliver on the change we’ve fought so hard for,” he said. “We’re not done. We’re working to repeal ‘Don’t Ask Don’t Tell.’ We’re working to close Guantanamo in a responsible way. Thanks to the heroism of our troops, we are poised to end our combat mission in Iraq by the end of August.”

With that, he made his pitch for the liberal base to get fired up for the midterm elections.

“We’re moving America forward,” he said. “When we’ve come this far, we can’t afford to slide back. And that’s the choice America faces this November. Between going back to the failed policies that got us into this mess, and moving forward with policies that are leading us out.”

This same basic sentiment was echoed by Reid and House Speaker Nancy Pelosi when they addressed the crowd in person the same day. Sen. Al Franken, delivering the closing keynote address of the conference, seemed particularly concerned, noting that anger toward the Bush administration prompted liberals to work hard to throw Republicans out of power in 2006 and 2008, and this year it’s conservatives who are angry and enthusiastic about sending Democrats packing.

After spending three days listening to progressives complain about how disappointed they have been in the failure of the Democratic Congress and President Obama to advance key aspects of their agenda, I almost felt like shaking them, and saying: “Sorry, but this is the best it’s going to get for you. If you aren’t happy now, you never will be.”