The Dems did fuck up, just not exactly as you describe. The Dems elected a neoliberal who appointed a conservative Attorney General. He did exactly what you'd expect a conservative AG to do and paved the way for Trump to return to power.
So to take Bush down, Clinton’s team drew up a plan to pump Trump up. Shortly after her kickoff, top aides organized a strategy call, whose agenda included a memo to the Democratic National Committee: “This memo is intended to outline the strategy and goals a potential Hillary Clinton presidential campaign would have regarding the 2016 Republican presidential field,” it read.
“The variety of candidates is a positive here, and many of the lesser known can serve as a cudgel to move the more established candidates further to the right. In this scenario, we don’t want to marginalize the more extreme candidates, but make them more ‘Pied Piper’ candidates who actually represent the mainstream of the Republican Party,” read the memo.
“Pied Piper candidates include, but aren’t limited to:
• Ted Cruz
• Donald Trump
• Ben Carson
We need to be elevating the Pied Piper candidates so that they are leaders of the pack and tell the press to [take] them seriously."
This is most probably what's really happening. The same way Democrats try to get right wing extremists in Republican primaries to win because they see them as easier to win against.