This could be viewed as the people who got the Republicans into their current mess versus people who already abandoned the party (Specter changed parties and Powell endorsed Obama).
Here is one major view:
Is this really the only future for the Republicans or is this just wishful thinking by progressives who insist that the last election changed everything? I don't think so for several reasons.
In political terms, it's easier to see what a viable Republican Party should ditch than what it should add. It's past time for the GOP to abandon its Gingrich-era, pseudo-libertarian anti-government rhetoric and to accept the broad social consensus behind progressive taxation, retirement security, action to forestall climate change, and a government role in health care. It might want to quit defending torture. It needs to move to a neutral or big-tent approach on major social issues—gay marriage, abortion, and stem cells—the way Democrats have done with gun control and the death penalty. A Sister Souljah moment would help. Some respected party leader needs to give a swift, symbolic kick to a fringe figure who epitomizes the intolerance of the religious right—perhaps Jerry Falwell Jr., whose "Liberty" University recently rusticated its beyond-the-pale campus Democratic Club.
Obama's open-ended expansion of government creates an opportunity for the GOP to propose a leaner, meaner alternative with more space for private enterprise, individual initiative, and dynamic growth. Efficiency-promoting tax reform, of the kind Reagan backed in 1986, would be a big improvement on unfunded tax cuts. After Obama, Republicans need to try for minority votes, both through the kind of immigration reform Bush favored and the kind of empowerment policies associated with the recently deceased Jack Kemp. Their strongest card may be one no Bush ever dared play: education vouchers for the poor. On health care, they might get behind a subsidized, individual-mandate framework as an alternative to Democratic plans that will have a tendency to morph into single-payer over time.
First, a lot of this description would put the Republicans to the left of Bill Clinton (post-1994). There is little evidence that the country has moved to far to the left to quickly. The number of people describing themselves as Republicans has dropped but the number of conservatives has stayed the same.
Obama remains fairly popular but his policies are much less popular. A strong case can be made that the Democrats' rise has more to do with Bush fatigue than anything else. Historically, the party in the White House has big losses in Congress in its 6th year and looses the net presidential election. Even the sainted Reagan lost the Senate in his 6th year. Historic trends show that the Republicans can expect gains in 2010 and 2014. These gains may or may not be enough to retake Congress.
One big problem with the "moderate" approach - the Republicans already tried it. Bush rejected the Libertarian wing of the party. He increased spending on everything, far exceeding inflation but he never got any credit for it.
This is the big problem with trying to be Democrats light. Democrats already own the issue. Whatever the Republicans do, the Democrats will propose more. The Republicans need a different approach.
The platform of fiscal responsibility and honest in government was a Republican staple until reckless spending under Bush and a series of scandals gave the Democrats an opening in 2006. It worked for the Democrats then and in 2008 but they abandoned it before Obama was even inaugurated.
One change that the Republicans should make is their stance on gays in general if not gay marriage. The country accepts gays and is accepting gay marriage. This isn't winning the Republicans any votes and is not compatible with limited government.