The Republicans need to become the party of the West again; now is the perfect time for them to reposition themselves as such. Westerners are naturally inclined to distrust Washington, in part because of their geological distance, and in part because of the natural cultural differences between the West coast and the East coast; even in California, which is as East-coastey as you can get in the West, there is a lack of the elitism that is on the East coast (though there is a different sort of elitism… but that is another story). Obama is the perfect president to become a contrast to – educated in the elite Eastern schools. Pelosi is a supplanted easterner – her dad was a congressman from Maryland and mayor of Baltimore, and Reid… well, Reid has his own problems.
So what the Republicans need to do is drop the social conservatism from their national platform, and return to federalist principals of states’ rights and local self determination. A fiscal moderate or conservative who might otherwise be inclined to vote Republican can easily be scared away by the Republicans in Washington trying to ban gay marriage, or abortion. The Republicans need to assert, as McCain has (though unconvincingly), that social issues need to be left up to the states. Local Republican parties can do whatever they want – if South Dakota wants to ban abortion, the South Dakotan GOP should feel free to back them, but the National party should take no stance. This plays to the median voter theory well, as social conservatives will vote for states’ rights as better than what the Democrats offer, and moderate voters who are fiscally conservative would also be able to support this platform. Also note that the country is shifting to be more socially liberal - and if social liberals can only vote for fiscal liberals, they will; sticking to the social right ensures a diminishing voting base.
The Republicans need to stick to the same message on fiscal issues as well; get away from the NCLB, etc, with the message “who knows how to fix the problems in our schools better; Washington politicians who are 2000 miles away, or us, who know the teachers and the children involved in the schools…” Replace schools with seniors, etc, and it seems to me like you have a winning message.
This party would be strong in the West, but also the South, which (for some reason) distrusts Washington. Obama will run stronger in the South and Midwest than the average Democrat would, but if the Republican Party reforms itself it could be very competitive South of DC and West of Illinois. The Northeast and Eastern-Midwest would remain Democrat, as they seem quite fond of free money from the Taxpayers.