The issue of what city is the capital of Israel is a political football (and even controversial on geography blogs). Despite the fact that the seat of Israel's government is in the city, the vast majority of countries are weary of recognizing Jerusalem as Israel's capital out of fear of alienating Arab states and potentially harming dialogue between Israel and various Palestinian factions.
Domestically, all major Republican and Democratic presidential candidates have called for officially recognizing Israel as the capital of Israel since the 1969 Presidential Election between Richard Nixon and Hubert Humphrey. In 2008, for example, Barack Obama countered claims of being anti-Israel by calling for a united Jerusalem being the capital of Israel (meaning that all of the city should be in Israel and none of it should be in a Palestinian state). In reality though, calls for an undivided Jerusalem or even recognizing part of Jerusalem as Israel's capital remains political theater for candidates seeking votes.
Therefore it may be somewhat surprising to some political junkies for the Democratic Party to remove calls for recognizing Jerusalem as Israel's capital, though it more closely mirrors reality since no president is willing to formally approve the move. The 2012 Democratic Party platform states:
President Obama and the Democratic Party maintain an unshakable commitment to Israel’s security. A strong and secure Israel is vital to the United States not simply because we share strategic interests, but also because we share common values. For this reason, despite budgetary constraints, the President has worked with Congress to increase security assistance to Israel every single year since taking office, providing nearly $10 billion in the past three years. The administration has also worked to ensure Israel’s qualitative military edge in the region. And we have deepened defense cooperation – including funding the Iron Dome system – to help Israel address its most pressing threats, including the growing danger posed by rockets and missiles emanating from the Gaza Strip, Lebanon, Syria, and Iran. The President’s consistent support for Israel’s right to defend itself and his steadfast opposition to any attempt to delegitimize Israel on the world stage are further evidence of our enduring commitment to Israel’s security.
It is precisely because of this commitment that President Obama and the Democratic Party seek peace between Israelis and Palestinians. A just and lasting Israeli-Palestinian accord, producing two states for two peoples, would contribute to regional stability and help sustain Israel’s identity as a Jewish and democratic state. At the same time, the President has made clear that there will be no lasting peace unless Israel’s security concerns are met. President Obama will continue to press Arab states to reach out to Israel. We will continue to support Israel’s peace treaties with Egypt and Jordan, which have been pillars of peace and stability in the region for many years. And even as the President and the Democratic Party continue to encourage all parties to be resolute in the pursuit of peace, we will insist that any Palestinian partner must recognize Israel’s right to exist, reject violence, and adhere to existing agreements.
All this is strong pro-Israel language. However, to some this shocks since there is no mention of Jerusalem as the capital like previous platforms such as 2008's which stated
Jerusalem is and will remain the capital of Israel. The parties have agreed that Jerusalem is a matter for final status negotiations. It should remain an undivided city accessible to people of all faiths.
For comparison, the 2012 Republican Party platform (PDF, page 49) calls for Jerusalem being Israel's capital but leaves ambiguity for final status as undivided/divided and potentially also serving as a Palestinian capital.
We support Israel’s right to exist as a Jewish state with secure, defensible borders; and we envision two democratic states— Israel with Jerusalem as its capital and Palestine— living in peace and security.