What's the main reason Republicans are dispirited right now? Because the Republican Party no longer represented less spending and limited government. What do we propose to do to fix it? Why... double down on this strategy by throwing in with the biggest spending bill in U.S. history if does enough tax cutting! As Jon infers, if the GOP accepts massive stimulus spending of any kind, it will sever the GOP from its base for years, and keep Republicans from rallying around a unifying limited government message in 2010. Instead of a peaceful 1994-style revolution, this will likely trigger a bloody Goldwater-style takeover of the GOP from the outside which may take 2 or 3 presidential cycles to fully play out. Ugly, but it may turn out, necessary.
There is broad consensus in the country right now that we need to "do something" about the economy. The economy will probably recover on its own by early 2010, but we must nonetheless "do something." Republicans should accept this fact and move on.
But there are different ways to "do something." A stimulus primarily composed of permanent tax cuts is a perfectly legitimate and defensive version of "doing something" both from a policy and public opinion perspective -- one that we can go to the country with and not appear like Hooverites or know-nothings. For one thing, past (successful) stimuli have been composed primarily of tax relief. Obama's own economist says the economic multiplier effect from tax relief is greater than than the general consensus of the multiplier from spending (allowing the GOP to paint larding up the bill with spending as primarily ideologically -- not economically -- driven). The American people are not economists, and likely have no inherent preference between tax cuts and spending increases so long as the plan is of a certain magnitude. So, let's educate them.
Right now, I yearn for the legislative acumen -- and in this case, the spine -- of Bob Dole, who rallied even John Chafee -- Lincoln's father -- to oppose the 1993 Clinton stimulus. With the GOP officially reaching rock bottom today, the Republican leadership in Congress has to recognize that number one political priority is not to give voters warm and fuzzies by angling into photo ops with Obama. Yes, he's popular, but his popularity can only redound to the benefit of one party, and that's not Republicans. For a cautionary tale on what happens when a party tries this strategy, see the 2002 midterm elections.
The GOP's number one priority politically is to set into motion a series of events that will make Obama look more ineffective, partisan, and unpopular than he is today. Playing hard-to-get on the stimulus is one way to do it. And we need to set the stage for a unified and effective Republican opposition that will actually fight from top to bottom. Even if Democrats did some truly stupid things these last two years, it was always impossible to rally grassroots Republicans in opposition because the party had zero credibility. Closing that credibility gap -- not beating Obama in popularity contest right now -- must be job one in order to rebuild the GOP. Newt Gingrich and Bob Dole (!) did it, and Boehner and McConnell must do the same. Not neutering our principles in search of short-term headlines would be a good start.