How did Mitt Romney and the Republican Party blow it all so badly?

The short answer is that the GOP insisted on pushing backward-looking social issues in a country that is increasingly libertarian.

The White House, a Senate majority, and strengthened control in the House of Representatives was not simply within reach for the Party of Lincoln this election cycle. It was gift-wrapped and adorned with pretty little bows. President Barack Obama presided over the worst economy in memory—a situation greatly exacerbated by the very policies he implemented to restart the economy; U.S. foreign policy is a shambles and our standing even (especially?) in the countries we "liberated" recently from autocracy is plummeting; and a record number of voters had disaffiliated from the Democratic Party since 2008. The president was pulling bad numbers right up to the eve of the election.

And yet Obama won re-election easily and the Democrats gained a net two seats in the Senate (including wins in Missouri and Indiana that should have been easy Republican victories). That's because the GOP, despite its endlessly repeated mantra of limited government, is wildly out of touch with the majority of Americans who consistently say they want the government to do less, spend less, and not enforce a single set of values.

There's no question that on broadly defined social issues such as immigration, marriage equality, and drug policy, Barack Obama has been terrible. He's deported record numbers of immigrants and his late-campaign exemption of some younger undocumented immigrants was one of the most cycnical policy changes imaginable. Yet he managed to increase his take of the Latino vote precisely because Mitt Romney and the Republicans are even worse (at least rhetorically) on the issue. Romney called for "self-deportation" during the Republican primary season and attacked Gov. Rick Perry—who pulls upward of 40 percent of Latino voters in Texas—for his mildly pro-immigrant stance (in his 2004 re-election bid, George W. Bush received around 40 percent on the Latino vote). If Republican representatives such as Steve King (R-Iowa) continue to talk about immigrants as akin to dogs and livestock, there's no way that the party can expect Hispanics to vote for them. Or non-Hispanics who are rightly disturbed by such attitudes.

Similar dynamics hold true on issues such as drug policy and marriage equality, each of which passed handily in various state ballot initiatives. Obama has raided medical marijuana dispensaries that are legal under state law without a second thought. Now that Washington and Colorado have legalized not just medical marijuana but all pot, the GOP should stay true to its valorization of federalism and the states as "laboratories of democracy" and call for an end to the federal drug war. The same goes for gay marriage, which is supported by a majority of Americans and passed in Maryland, Maine, and Washington state—even as an anti-marriage equality amendment to Minnesota's state constitution went down to defeat. It's fully consistent for small-government Republicans—who rarely miss an opportunity to talk about returning "power" to the states—to champion these developments. As Romney has put it, "Every time you have an occasion to take something from the federal government and send it back to the states, that's the right direction."

The GOP has a major problem with women voters, who perceive it as either hostile or indifferent to questions about reproductive freedom and choice. Obama won women's votes by 12 percentage points this time around, about the same as he did in 2008 (which suggests this year's result is not a stray indicator). There's no question that the media and Democrats made a huge deal out of Todd Akin's bizarre biological disquisitions and Richard Mourdock's principled commitment to an extreme pro-life position. But the reason such statements resonated with voters is because they confirm the idea of the GOP as an anti-sex, anti-abortion party that routinely says the government is awful at everything it does but should have the final say over whether women can get abortions. That's a contradictory message that is also wildly at odds with the 77 percent of Americans who believe that abortion should be legal under at least some circumstances.

If Republicans failed to engage the libertarian sentiments of voters when it comes to social issues, it also failed to put forth a serious alternative to Obama's dismal record of increasing government spending (with promises of yet more to come). Indeed, Romney and his fellow Republicans simply did not lay out budget plans that called for specific major cuts to programs even as they called for tax cuts. Instead, we heard only that President Romney would eventually reduce spending to 20 percent of GDP—a level that is still more than two full percentage points above the post-war average for revenue as a percentage of GDP. At the same time and despite a 70 percent-plus increased in military spending over the past decade, Romney committed to the "goal of setting core defense spending…at a floor of 4 percent of GDP" (emphasis in original). Add to that Romney's inability to say flatly that he would actually repeal Obama's health-care reform, something everyone understands will cost far more and deliver far less than promised. Instead, Romney averred that he would keep the parts he liked. To a population rightly worried about the looming fiscal cliff, out-of-control spenidng, and massive national debt, the GOP economic plan was weak tea, an echo of the Democratic plan of spending more and more and figuring out how to pay for it sometime in the future.

So far, the right-wing response to the GOP's drubbing has been strange, to say the least. Right-wing activist Richard Viguerie, dubbed "conservative of the century" by the Washington Times, has said, "Republicans ran away from such issues as same-sex marriage, religious freedom and Obama's war on the Catholic Church." At City Journal, the influential publication of the conservative Manhattan Institute, Andrew Klavan proposes that right-wingers play the "long game" by taking over the media and culture industries and stressing Judeo-Christian values because "an irreligious people cannot be free."

Charles Krauthammer counsels to keep on keepin' on: "There's no need for radical change," he says. Don't sweat the increase in minorities, he says, married women still vote Republicans. He's right on that, but wrong to ignore shifts in public attitudes that are broad-based and, even more important, party planks that are flatly inconsistent with stated GOP ideology and recent experience with Republican legislators. George W. Bush and a Republican Congress (whose leadership remains firmly in power) massively expanded state spending and control of all aspects of life. They rushed us into wars and then prosecuted them poorly. While Obama has simply piled spending, debt, and stupid foreign policy decisions on top of all that, it didn't mean that voters were willing to vote Romney as the lesser of two evils. Sometimes you stick with the devil you know.

If Republicans want a game plan for the future, they should take a long look at the strong response to former New Mexico Gov. Gary Johnson, who pulled over 1 million votes and over 1 percent of the total ballots cast as the Libertarian Party candidate. That's the best result for a Libertarian since 1980 and it comes in an election that was cast in apocalyptic terms—one in which votes were supposed to be so important you shouldn't waste yours on third-party candidates. Johnson, who had virtually no money to spend, got his votes not by carving special exceptions to limited government principles when it comes military spending or lifestyle choices or immigration or on whatever issue the GOP assumes voters want an activist government. Quite the opposite: He made a consistent case for limited government that is completely in line with what a majority of voters say they want.

For the Republicans to succeed, they need to confront and work through their contradictions. First and foremost, they need to be internally consistent when it comes to the limited-government ideology they claim makes them different from Democrats. Everyone understands that political parties are broad collections of interest groups that may actually have little in common but have decided to band together out of necessity. The role of party ideology or rhetoric is to take these disparate interests and make them seem like a coherent entity when they are anything but. There's no necessary connection between, say, between wanting to reduce top marginal income tax rates and supporting a ban on flag burning or any given position on abortion, even as the contemporary Republican Party would argue that these are all beads on the same necklace (the Democrats are similary chock full of random positions). The GOP has reached a point where its insistence on choice in some areas (say, the decision to buy health insurance or where to send your kids to school or whether states can opt out of this or that federal program or law) is plainly at odds with so many of its other positions that something has got to give. When Charles Krauthammer suggests "we had a winning message but didn't communicate it well enough," he's exactly wrong. The GOP has a muddled message that it's been communicating about as well as anyone can.

Why is it important for Republicans to put forth a better effort? Because the only way a first-past-the-post system like we have in the United States functions well is when the two major parties (and there will always only be two major parties, though what they stand for can and does change) present not just starkly different rhetoric but starkly different choices to voters. Back in 1964, when the modern GOP moved decisively toward the libertarian, limited-government sensibility of Barry Goldwater, his followers proudly proclaimed that he offered "a choice, not an echo" not just to Lyndon Johnson but to the post-war consensus of rule by elites and centralized experts. Goldwater and his crew were as different from Rockefeller Republicans as they were from any Democrat.

When it comes to spending, economic intervention, foreign policy, executive power, and civil liberties in the 21st century, there has been precious little daylight between the Republicans and the Democrats (do we really need to rehearse GOP-backed initiatives such as No Child Left Behind, Sarbanes-Oxley, the creation of the Transportation Security Administration, Medicare Part D, TARP, and the first auto bailout?). To the extent that the GOP offers a choice on broadly defined social issues, it is a party anchored firmly in the past that needs the federal government (of all entities) to enforce its desired positions on abortion, drug legalization, and marriage.

That's simply no way to woo the increasing number of libertarian voters and of other independent voters who have turned away in increasing numbers from the Democrats and Republicans as worn-out artifacts of the dim past. The GOP can lick its wounds and tell themselves whatever they want to hear—that it was the media's fault, that they need to be more religious, that they just need better candidates, or whatever. But until the party actually changes its positions on basic policy issues and articulates a clear and consistent role for limited government, it has nowhere to go but down.