One reason, as John rightly notes, is that extremism sells, though I would take issue with his statement that for “some reason extremism sells well in America”, as though the rest of the world were so much more measured and rounded. Extremism sells everywhere. Most of those reading or watching political polemics are not auto-didacts but consumers, mixing politics and entertainment. This is not inherently a bad thing, but does explain why Morgan Spurlock is more popular than serious works of dietary science. Similarly, it is easier to call the Democrats "liberal fascists" than to explain why both individuals and society benefit from greater individual freedom.
It's a shame, but in an era where people like to take bite-size chunks and move on, it's inevitable.
Nonetheless, there is a genuine criticism of the politics that would-be President Clinton (the subject of the “liberal fascist” claim that so irritated John) and her misnamed "liberal" associates espouse, which he accurately sums up when he says "...it merely means that the state treats you in a patronizing way... [T]hat's socialism." Indeed it is. Socialism (at least, State-Socialism) is based on the premise that Government is better placed to make decisions than individuals: so, for example, the Government knows better than I do how to educate my children, or what pension arrangements I need. This is patently false.
Similary, if John’s tongue was not firmly in his cheek when he wrote "I order you to watch" the interview in which the claim was made, it, too, would be an example of the socialist mindset: we will make you do what (we think) is good for you – as the Government is attempting with its new "lifestyle politics".
Ultimately, the link between socialism and fascism is that both are willing to use coercion to force individuals to comply with a set of rules aimed at achieving the philosophical aims (be they egalitarian or nationalist) of the ruling party. Nazism was also styled National Socialism, note. By comparison, liberalism (which has little in common with the philosophies and policies espoused by Democrats) tries to create a system that enables every individual to pursue their own goals, only circumscribing individual action where it would impede the freedom of others.
The main reason why socialism has not had the bad press that fascism got (being on the winning side of WWII notwithstanding) is that it has generally been implemented in a more dilute (Social Democratic) format, rather than full-on. This is the “Third Way” of which John says he is “a dedicated enemy”, and while it is clearly not as bad as it’s extremist (aka. Communist) variant, it remains fundamentally flawed because it is based on the principle that individuals are not as good at making decisions for themselves as are the elite, and that coercion should be used to bring them to heel.