One of the most interesting aspects of the 2004 election was the way Democrats were successfully tarred as the party of the inactive establishment even though they don’t control a single branch of government.

This pinpoints their key weakness as a political force – the Democratic Party no longer stands for action or reform. Senator Kerry famously failed to make a positive case for change. His campaign became a cause only when directed toward taking George Bush out of office. That was not enough to claim the White House.

The Democrats now face not only a presidential election defeat, but a rising Republican nationwide tide. The Democrats lost further ground in Congress, and eight of the blue states that voted most heavily for Al Gore in 2000 now have Republican governors. Currently, seven of the nine Supreme Court justices are Republican appointees, a margin that seems likely to grow even more lopsided in the coming four years.

Despite this set of circumstances, the Democrats have so far been unable to claim one of the few benefits of being in opposition – the ability to be a force for reform. Because of their mid-20th century success in controlling government, they are still popularly identified as the party that defends bureaucracy and inside-the-beltway business as usual.

“Have we lost the battle of ideas? No question about it,” asserts New York City Council Member David Yassky, a Democrat from Brooklyn. “The deal is that Democrats are so wholly invested in the status quo of government.”

In the face of Republican campaign’s big-picture proposals to reform Social Security and other areas of government, Mr. Yassky explains, “the Democratic platform was ‘we’re going to not let them do those things.'”

To succeed, the Democrats will have to propose as well as oppose. They’ll have to carve out responsible and clearly defined common ground on pressing national issues such as education, intelligence, and entitlement reform. The still unanswered question is whether they will be able to sufficiently free themselves from special-interest constituencies like public sector unions to do so. This is their opportunity and responsibility of the moment, and whether they coordinate and rise to the occasion will determine their future as a resurgent or increasingly irrelevant national party.

When traditionally blue states such as New York, California, and now Washington turn to centrist Republican governors it is because the Democratic governing establishment has failed to be a force for independent reform. New York City provides a particularly potent example of this dynamic. As Mr. Yassky points out, “even after eight years of Rudy Giuliani,” and at least four years of Michael Bloomberg as mayor, “Democrats are seen as the party of status quo in New York City government.”

This is worth expanding on: Democrats control 48 out of 51 city council seats. They hold every citywide elected office except the mayoralty. They have an overwhelming 5-to-1 registration advantage, and yet New Yorkers have turned to Republican mayors in the last three elections. This is in large part because of their stale stranglehold on local government – voters elect Democrats when they want business as usual. When they want independence and reform, they vote for Republican executives to lead.

Mr. Bloomberg’s own political evolution is evidence of this: when the multi-billionaire mayor wanted to enter public service in 2001, he did not run in the Democratic primary, despite a lifetime of personal support for liberal causes. He understood that he would have no hope of surviving a September primary crowded with career politicians in an election with 10% turnout. Instead, he ran for the Republican nomination, where independence from the local political establishment is not a negative, and he was rewarded with a win in the general election.

This is, in microcosm, an illustration of the problems affecting the Democratic Party nationally. Throughout the 1970s and 1980s, they controlled the vast majority of state legislatures as well as Congress. In this environment, the easiest way for aspiring young leaders to get ahead was to go along and not make waves. This encouraged conformity and mediocrity, which is counter to the whole concept of leadership. The bottlenecking of talent was only increased by the absence of term limits. Independent reformers were left with the Republican line as the alternative. Now, Democrats are still identified as the party of the establishment while they are left out of power with a relatively thin talent pool and little in the way of a positive agenda.

The Democrats can bounce back from this most recent defeat by embracing the opportunities of opposition and functioning as a party of constructive reform. The American people want solutions, not simple obstructionism. As Councilman Yassky pointedly asked, “Where is our Contract With America?”