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The word liberal is probably one of the most arbitrarily used in American politics. If one includes classical liberalism, then it could easily mean either “conservative”, “progressive”, or “leftist,” all different things.
“Liberalism” is of course related to the word “liberty”—it is a school of political thought that renders everything the government does subordinate to its insurance of its citizens’ freedom.
What one may call “modern” liberalism was originally called “social” liberalism, to distinguish it from its parent—“classical” liberalism, which in America (although less so by the year), coalesced into “conservatism.” We have no original, primordial aristocratic order to “conserve,” so really that is a misnomer: it means placing the burden of justification on the advocate of curtailing liberty to improve the country, which is to say that its better to let the country remain imperfect, than to try to make it more perfect by strengthening the state at the expense of the individual.
The divide of left and right in America differed from that of the rest of the world for that reason—after the French Revolution (when the concept of “left and right” was formed), there were liberals/republicans on the left and monarchists/conservatives on the right. The fault line was really between the idea that government can be actively created on the left, and that something resembling monarchy and aristocracy is the inevitable and natural order of the universe on the right. All the ideas of classical liberalism—property rights, consent of the governed, representation by the people, were never really disputed in America, whose regime accepts the principle of liberalism in this sense to be non-negotiable, as it is taken to represent manifestly “inalienable rights.” Old World conservatives were sometimes illiberal—which is to say liberalism wasn’t a priority for them, but they didn’t actively oppose it, as fascists like Hitler and Stalin did. Perhaps it’s more accurate to say conservatism in the Old World was still capable of being anti-individualistic without being anti-liberal.
For this reason, by the 20th century, left/right, somewhat uniquely in this country, became a contest between classical liberalism on the right—which meant a more strict modeling off the founding, that the government owed you nothing other than not to make your life worse than it already was—and social liberalism on the left, which promulgated modest compromises to freedom in order to empower the state to make society more just and equitable. In principle at least, both social and classical liberals believe that what really matters first and foremost, is that the citizenry be free, and that the state be the property of the people rather than the other way around—at knowing cost to the efficiency of its apparatus.
However, many on the left calling themselves liberals are in fact actively anti-liberal, which is to say “leftist.” Leftists do not believe in consent of the governed [something quite different than a simple voting majority—a subject for a different post] or property rights, which is the opposite of liberalism. For them, what matters is equality, at the expense (as it inevitably is) of freedom. Liberalism is equality of opportunity, and leftism is equality of outcome. Social or “modern” liberalism attempts to straddle the fence, assisting in the equality of outcome without going full scale leftist and curbing people’s fundamental freedom.
It should be noted that liberal and conservative are asymmetrical categories; a “progressive” is the opposite of a conservative, and an anti-liberal/fascist is the opposite of a liberal. It is possible to be a (constitutional, i.e. “American”) “conservative liberal” then…men like John F. Kennedy and D.P. Moynihan come to mind. Franco’s conservative fascism could thus also be distinguished from Hitler’s progressive fascism. People tend to give the political right a monopoly on “fascism” which is just a left PR victory; a fascist is simply someone who believes the people are the property of the state and does not recognize property rights, an anti-individualist, i.e. an anti-liberal.