Political realignments occur every 36 years (1824, 1896, 1968) and great ones every 72 years (1788, 1860, 1932). One was due in the 2004 election, and the Demos blew it. The Demos had a chance to complete a flip in the electorate of profound proportions again in 2008. It is looking like they blew it again.
The realignment is for the Demos to become the party of fiscal responsibility. Post 2008, Obama has pushed budget busting programs under the guise of a financial crisis. Instead of change, it looks like liberalism gone wild. In 2004, Kerry mixed his messages between populism and globalism such as to freeze this process. Doesn't work to turn around and kick dirt into the fiscal conservatives by arguing for tax increases, yelling at Benedict Arnold CEOs, and complaining about outsourcing and lost jobs due to globalization.
The Demos can recapture glory and victory next time (2012) by understanding this Great Political Realignment. If they fail to embrace it, the Repubs will triangulate on it and dominate elections again.
The great political realignment that is occurring is a change from Repub to the Demos as the party of Hamilton (cityfolk, banking, commerce, international), and from the Demos to the Repubs as the party of Jefferson (countryfolk, religious, xenophobic). Demos become the party for free trade, globalization, bond markets, new economy. Repubs the party of religious folk, traditional values, America First, old economy. Nixon's Southern Strategy (a minor 36 year realignment) began this by pulling the South from the Demos, and Reagan's embrace of the religious right extended this by pulling the more religious and rural voters countrywide away towards the Repubs. Clinton's economic success set up this realignment by pulling about half the fiscal conservatives towards the Demos, a remarkable drift. Then Gore and Kerry botched it, and it appears Obama has blown it.
What is remarkable about this flip is it is an almost complete reversal of the election of 1896. This is beginning to be picked up by the blogsphere, here and here. Comparing the electoral maps is amazing. Here is the 1896 map, complete with Red and Blue states, except this time Blue=Repub and Red= Demo:
The 1896 election pitted William McKinley (Repub) vs William Jennings Bryan (Demo-populist). McKinley was all for stoking up the engine of Industry. At that time we were to the British what Japan in the '80s and now China in the '00s is to us - the emerging manufacturing powerhouse. Bryan was fighting for traditional values and Old Time Religion. He was defending rural interest against bankers from the East. "Don't crucify us on a cross of gold!" was his battlecry of freedom (favoring easy money over hard money backed by gold). Bryan was later the Pyrrhic victor in the 1925 Scopes trial on evolution, and became a lampooned figure in such plays and later movies as Inherit the Wind.
The politics of this period are captured in the movie (and books) The Wizard of Oz. The yellow brick road is the gold standard; the wicked witch of the East is JP Morgan; the wicked witch of the West is a composite for the four RR barons in SF; the emerald city is Washington; and the buffoonish wizard is the President (ironically played in the movie by an actor who looked like Bryan rather than McKinley - see picture below). The movie celebrates traditional values and promotes farmers (Scarecrow) and workers (Tinman) over munchkins and more vile creatures. I guess that the cowardly lion is Bryan. He later found his courage and ran for President three times.
Clarence Darrow and William Jennings Bryan at the 1925 Scopes trial, courtesy of The Volokh Conspiracy. The trial was popularized in the play (and later movie) Inherit The Wind, which made Bryan out to be a doddering fool. A bit of revisionism makes him look better: the book in question that taught evolution also taught the then-popular theory of eugenics, of white superiority. Maybe a little old time religion was just what needed to provide perspective on the teaching of politics disguised as science.