If you listen to the standard line in the mainstream media, the Republican Party is losing because it is not moderate enough. As has been noted by some, the Republicans have run moderate candidates in the last two elections without success. The problem is not insufficient moderation.
The key is taking a more libertarian perspective. The costly wars abroad, diminution of civil liberties at home, and rampant spending are all important reasons why the Republican Party is not as successful as it could be. The question is: is it possible? Is it possible to be what I call a Republiterian (Republican and libertarian at the same time)? Ron Paul and his son Rand have made it so that this question is a viable one in a way it would not have been ten years ago.
The fact is, there is a tremendous disconnect between the Republican establishment and grassroots Republicans. Grassroots Republicans dislike the Republican establishment almost as much as the Democrats. The establishment loathes libertarianism, as it would cut back on their powers. The establishment hated Ron Paul. Here is a person people got genuinely excited about, and they try their hardest to make sure he is not nominated. Instead, they nominate Mitt Romney, who we all know bored the heck out of the base. If the party can move away from instead of toward the Republican establishment (which almost no one likes), then it has a real chance of winning back the White House in 2016. It is by heading toward liberty that the Republican Party has any chance of differentiating itself from the Democrats. Whether or not it will remains a big question mark.