The Democratic Party occupies the social left and economic center. It needs to do the exact opposite.
Abortion won Bush the election, gay marriage to a lesser extent. Exit polls showed "Moral Values" put Bush over the top.
The fact that mostly urban liberals are baffled by this shows how out-of-touch with that giant mass of red in the middle of the country they are. For example, Bush may be a ex-alcoholic and drug user, but he found Jesus and quit drinking. He's now a teetotaler who is quite conservative in his personal morality (as for the morality of his policies, well, maybe not.) What many here see as hypocrisy, people in the big red mass see as evidence that Jesus can change lives. Faith is still important in the big red mass, as is family, as is tradition.
However, at least in South Carolina, there is also a certain libertarian streak. While many in the South believe in certain traditional values, we also don't want anyone poking around, especially the Government. This is how Strom Thurmond's black daughter stayed out of the public eye for so long, even though it was well known in certain circles what happened. (Rumor has it this tradition continues with the not-so-secret secrets of his successor, Lindsey Graham)
Basically, as long as the Republicans stay far-right on the social issues, the Democrats can safely occupy the center. Respect the traditions and values, but tolerate differences.
On faith, we may love Jesus, but you don't have to. The First Amendment is good for the Church and good for the State. But taking "Under God" out of the pledge, removing "In God We Trust" from the money, and hunting down public displays of the Ten Commandments is stupid and counterproductive.
Many of us do not personally approve of homosexuality, (or even of sex outside of marriage) but no one wants the bedroom police either. Encouraging tolerance for people of differing sexual preference would probably be a good position. Being seen as the party of gay marriage is not.
Abortion is another issue the Democrats need to move to the center on. Quit using NARAL talking points when dealing with abortion. Most people disapprove of abortion, but believe it should be safe, legal, and fairly difficult to get. (The Anthony Kennedy approach) A good center ground would be to acknowledge abortion is bad and to start working to make laws that help women choose life. Don't ever support late-term abortion except in the most extreme circumstances. (Your arguments don't matter, when you support post-viability abortion, you will lose EVERY time in the eyes of the public.)
On Gun Control, what makes a gun dangerous is who is behind it. In urban America, guns are a problem. In rural America, guns are a necessity, especially in areas where the Sheriff's response isn't very fast. Howard Dean is right, this should be a local issue.
These are the issues the Republicans are winning on. Abortion is how Bush won the Catholic vote. (Rural socially conservative Catholic Democrats gave Bush Ohio and the election) Gay marriage is how Bush gained among African-Americans. And Howard Dean's famous "guys with Confederate flags on the back of their pickup trucks" don't want the Government taking their guns away.
While a move to the center on social policy may be wise, they should go left many other policies and stop trying to be right-lite.
Voters who chose on economic policy chose Kerry over Bush 4:1. If it was the economy, stupid, Kerry would have won with 80% of the vote! Take that ball and run with it.
Kerry wanted to import drugs from Canada. Why import them when we can do the same thing Canada does in the U.S.? (Inez Tenenbaum actually brought this up in the Senate debate. Good for her.) Why stop at drug importation when we should provide health care for every American? Healthcare, even "Hillarycare" as it was derisively called, did not cost the Democrats Congress. It was Clinton's tax hike, gays in the military (even watered down to "Don't ask, don't tell", America wasn't ready for that yet), and the assault weapons ban (a useless law that had too many loopholes to be effective and just annoyed law abiding gun owners. This brought the voting wrath of the NRA.) Healthcare is a winner with the public, run with it!
On Environmental issues, go back to the basics. Sure, global warming is a big issue, but it's quite complicated and it may be part of a natural cycle. (Al Gore looked like a fool giving a speech on global warming when it was 16 degrees outside in NYC.) It's not really helping. However, people really like good old fashioned conservation. We want our natural lands protected, our air clear, and our water safe to drink. People who are otherwise quite conservative will support keeping lakes and streams clean for fishing, and woodlands availible for hunting, and the great outdoors around for simple enjoyment. The Dems should be taking advantage of this.
On foreign policy, remind people that the Democrats have been stronger on defense because they have been smarter on defense (well, except for LBJ) Republicans spend billions for useless weapons systems, only to find that in Iraq anyway, the British are doing better because they have the equipment and training they need for a fraction of the cost. Democrats don't sent American troops where they don't belong (except LBJ) and when they do send them abroad, there is a plan to bring them all back. Americans don't want to conquer the world. No Democratic Senator was "punished" for opposing the Iraq war, yet support for the war didn't help Kerry, Daschle or any other Democrats who backed Bush's plan one single bit.
On trade, free trade is generally good. Free trade with a country that has no labor and environmental standards, rigs it's currency, or puts up trade barriers on America's goods isn't free trade, it's called getting f---ed. People don't like having their jobs outsourced to third world sweatshops.
Education is always a winner, especially among women. Investment in education pays for itself in the long run and then some. K-12 should be well funded, community college/tech school should be cheap (or even free) to all who can go, and no student who has the ability should be denied education at a public university because of cost. Furthermore, programs should be available to erase student debt by teaching in less desirable schools, practicing medicine in a poor area, or using the education recieved to give back to the community.
People will pay taxes if they feel they are being well served. I pay city taxes for city services, although I could have chosen not to have these taxes had I bought a house in the county instead. However, the IRS makes paying taxes a pain in the ass. Fix the tax code to generate the needed revenue, close the loopholes, and make it fairer to rich and poor alike.
People want a sane energy policy. Once again, Americans do not want to conquer the world. We would love to tell the Saudis exactly what they can do with their oil. Energy independence is a laudable goal, much like putting a man on the moon was in 1960. It is a good mixure of good, forward thinking policy and old fashioned patriotism.
On labor, raise the minimum wage. The last time the minimum wage was raised, 1997, none of the bad things happend that the Republicans said would happend. In fact, this was in the middle of a boom. Unions have been key to worker gains in the 20th Century and should be allowed to do the same in the 21st.
From 1932 to 1968 Democrats combined progressive economic policies with the values of most Americans. To return to power, they need to do the same once again.