"First, the term liberal is heavily associated with the social-sexual mores of the American upper class. Most Americans reject those. And, members of the upper class who are right-of-center on economic issue tend to call themselves fiscal conservatives or libertarians. My baseline sense is because Milton Friedman and his disciples convinced them that this was an acceptable cosmopolitan alternative to the label liberal.
Thus, one has to both embrace upper class social-sexual mores AND be traditionally left-of-center to be comfortable with the term liberal. The term progressive does better precisely because it does not carry that social-sexual baggage."
The main point is, I think it's a labeling issue. For all intents and purposes I'm probably a "liberal". I've certainly been called that by tons of people in the blogosphere. But I've never in my life associated myself with the term. I've at one point or another in my life been happy to label myself a "conservative", a "libertarian", a "centrist", and a "moderate" but I'm not sure I've ever called myself a "liberal". There's just something wishy-washy and unrealistic about the word, and I don't consider myself wishy-washy and I definitely consider myself a realist. I think this association is mostly a PR thing over the past several decades. For better or worse, it's not a label many people embrace but it's a label that others love to use to describe all matter of sins (and perhaps this is why "liberal" is such a toxic term).
So what does that really mean? I think it's pretty unclear. When I'm feeling particularly liberal, I usually say I'm "left of center". Is that a substantive difference? I don't know.
UPDATE: It also probably has to do with my bizarre combination traditionalist/hippie of a brother. Whenever he whips out the hippy-dippy stuff I convulse a little and lose a small piece of any existing desire to associate with the term "liberal".
Speaking of really dumb terminology, I might as well take this opportunity to once again vent about the use of the term "free market economist" to mean "libertarian economist". I don't have a problem if you want to call yourself a "free market economist", but I hate talk about "free market economists vs. Keynesian economists". The very phrase sounds non-sensical to me - or more accurately, it sounds like a category error to my ears. In fact, it sounds so strange to me I have consciously remind myself that people who talk like that probably aren't intending to make the implication that it sounds like they're making (or maybe they are? maybe I'm being too generous). End rant.