After losses, GOP asks: Now what?

Even before the votes were counted, the 2006 election set off a sweeping critique of what went wrong both within the Republican Party and among groups that once backed it.

On Capitol Hill, the power struggle to lead the new Republican minority is already under way. On Wednesday, Speaker Dennis Hastert announced he will not to seek the minority leader post in the next Congress.

Those with close ties to disgraced lobbyist Jack Abramoff – or who knew about disgraced former Rep. Mark Foley's e-mails to pages and failed to act – need not apply. Lawmakers are awaiting the results of a bipartisan ethics investigation on a possible coverup in the page scandal, which could produce more openings in GOP leadership.

But GOP self-critics say that the bad environment – scandals, war, the economy, or the president – doesn't account for this historic GOP defeat. The need, they say, is to get back to the principles that won them their majority in 1994.

Call it a bridge to the insurgent past. While the Republican Class of '94 campaigned to balance federal budgets, the GOP in power has racked up massive deficits. The party that campaigned to limit the size of government instead vastly expanded it. And the party that railed against entitlements created the biggest expansion of one, the 2003 Medicare prescription drug program, in a generation.

"We did not just lost our majority, we lost our way," said Rep. Mike Pence (R) of Indiana, one of 25 Republicans who voted against the prescription drug plan. He also chairs the conservative Republican Study Group, the largest group in the caucus.

"While the scandals of the 109th Congress harmed our cause, the greatest scandal in Washington, D.C., is runaway federal spending," he added in a statement within hours of the historic defeat. Mr. Pence sat out the fight in January to replace Rep. Tom DeLay of Texas as majority leader, but he is now widely seen as a top contender. On Wednesday he announced his candidacy for the top GOP post. "Only by making a dramatic turn in the direction of the Republican Revolution can we hope to attain majority status," he wrote in a letter to his GOP colleagues.

In a separate statement, Rep. Jeb Hensarling (R) of Texas, who has drawn fire from fellow Republicans for his outspoken opposition to members' pork projects, called for a "return to Republican principles by renewing our commitment to limited government, individual empowerment, a strong national defense and traditional American values."

Along the same lines, the current GOP majority leader, Rep. John Boehner (R) of Ohio, called on the GOP to "recommit ourselves to the principles that brought us to the majority and renew our drive for smaller, more accountable government."

At stake in the next leadership fight is whether the GOP continues as a party of big conservative government or returns to its ideological roots in the Goldwater and Reagan eras, say libertarian critics.

"This is all a debate leading up to 2008, which is when we really get to make our decisions: Are we going to continue to follow the George W. Bush path of big government conservatism or the path of Reagan, Goldwater, and – to some extent – Newt Gingrich," says Ryan Sager, author of the recent book, "The Elephant in the Room: Evangelicals, Libertarians, and the Battle to Control the Republican Party."

Libertarians say the GOP's commitment to a social agenda that bans gay marriage and limits government funding for embryonic stem-cell research also contributed to its defeat this week. If there are new leadership elections, the party's conservative base is "going to be looking to clean house," and wipe away remnants of a leadership machine that "presided over the explosion of earmarks and petty corruption and worse," says Mr. Sager.

Meanwhile, business groups that work with the current GOP leadership are prospecting new ties with the incoming Democratic majority. One thing that Republicans and their critics are missing in the postelection analysis is that "this Congress, though well-intentioned, did not achieve a lot of legislative progress," says Jay Timmons, of the National Association of Manufacturers.

Of the many agenda items left incomplete at the end of the 109th Congress, those that most concern the business community include a permanent extension of the estate tax, renewal of research-and-development tax credits, and plans to bring down the high cost of oil and natural gas by increasing the domestic supply.

"They still have time to do this in the lame duck session," he adds.