The goal of this common statement is to make Israel seem similar to the US, to establish familiarity and trust. The subtext, in other words, is that Israelis are “just like us.”
But Palestinians in Israel do not live under a liberal democracy like the US.
1) Israel is only truly a democracy for Jews. Even the 20% of Palestinians who hold Israeli citizenship don’t have the same rights that Israeli Jews do. Palestinians living inside Israel cannot marry a Palestinian in the West Bank or Gaza and have their spouse join them in Israel. Jews anywhere are allowed the right to move to Israel, but Palestinians have no comparable right. Jews and Palestinians are assigned to different school systems. A 1953 law unilaterally expropriated 1.2M dunams of land (about 300,000 acres) from Arab owners. The Israeli civil rights group Adalah maintains a database of discriminatory laws.
2) Since 1967, Israel has de facto controlled most of the West Bank and Gaza. Palestinians living in these areas do not vote for the authorities that control their access to water, electricity, roads, and so on. Jews living on this land, however, do vote. In spite of some minimal administrative responsibilities gained by the Palestinian Authority during the Oslo Peace Process, Many Palestinians live under Israeli military law while all Jews live under Israeli civilian law, regardless of whether they are within the “Green Line” that defined Israel’s borders after the 1948 war, or whether they live on a settlement in occupied land. Jews and Palestinians are required to use different roads when traveling within the West Bank. Palestinians are subject to being stopped at frequent checkpoints where they are frequently detained and humiliated.