We tend to think of politics as Left vs. Right but that really is too simple. Using the Nolan Chart (www.nolanchart.com/) politics really has two dimensions, not one.
Liberal vs. Conservative - Liberals and Conservatives differ on social values. Issues such as the role of women, sexual freedom, civil rights, recreational drug use and religious expression are all areas of contention between the two groups.
Libertarian vs. Statist - Libertarians and Statists differ on the role of government. Issues such as taxes, state rights, the military, government safety nets and government regulation are the main areas of disagreement.
So why don’t we have four major political parties instead of four?
With our winner take all political system, there really can only be two political parties at a time. Additional parties tend to act as a spoiler, splitting the electorate of one of the other parties (Nader!). These four political outlooks then tend to coalesce into two different ideologies.
In America, we have Conservatives and Libertarians in the Republican Party and Liberals and Statists in the Democratic Party. The current conflict in the Republican party seems to be due to a break down of the dominant ideology of the past few decades. Libertarians feel that the Republican party has become too authoritarian and the conservatives feel that it has not fought hard enough to promote Christian values.
The Republican ideology was first visible to mainstream America with Reagan’s defeat of Carter in 1980. Reagan was able to cement together small government Libertarians with moral majority Conservatives. Prior to the 1960’s the Democratic party was dominant due to its coalition of Conservatives and Statists. With the Democratic Parties support of civil rights for blacks, turning against the Vietnam War, and a permissive attitude towards sex, drugs and rock n’ roll, the Democratic party began to attract Liberals, thereby gradually pushing the Conservatives (Nixon’s Silent Majority) out of the party and making them receptive to the message of the Republican Party.
If the Republican Party is now starting to break apart, I wonder if the Democratic party will do the same thing in the following years. Considering how unpopular the federal government is right now, it would not surprise me if Liberals began to affiliate more with Libertarians than Statists. The Democratic leadership seems to have gone with the Clinton strategy of appearing "Middle-Right" as possible. This means that while the Democrats were able to pass a massive Health Care bill, overturning something as unpopular as "Don’t Ask Don’t Tell" appears to be something they are very nervous about. If the Democrats continue to ignore its Liberal base (or worse, try to run against it in order to appeal to Conservatives) there is a very real chance that a break down in the Democratic Party also may occur.
Considering that the large generation of Americans born between 1980 and 2000 (my generation) are primarily Liberal, any political party that gets stuck with the older Conservatives is likely to end up in the wilderness for a long time. This appeared to happen to the Republicans in 2008 but unless the Democratic Party actively tries to keep us, there is a very real chance that they could lose us.
The Democratic Party has essentially been successful this far because the Republican leadership has been so incompetent. The popularity of Ron Paul among young Republicans and the ideas Meghan McCain has been throwing out indicate that there are some Republicans that get it. If the Republican party was to keep there Libertarian ideas and throw out their Conservative ideas, thereby courting Liberal voters, the Republicans would likely become the dominant party. Instead of making the same mistake the Democrats did 40 years ago, going Liberal as the country swung Conservative, the Republicans would abandon Conservatives as the country swings Liberal.
Personally, I would prefer that the Democrats would figure this out before the Republicans and stop ignoring/running against their Liberals. I’d sooner die than ever be a member of the Republican party. I’ve voted for exactly one Republican during the three elections I’ve voted in (2004, 2006, 2008), and that was for some guy running for state auditor or something like that. However, if my choices become a Democratic Party that is primarily Conservative/Statist and a Republican Party that is primarily Liberal/Libertarian... Well let’s just say I care much more about my individual freedoms then whether the government is big, small or pink purple polka dotted.