Here's what I think. Two reasons Dems are losing:
1. Perception of contempt. People in the heartland think Dems don't think much of them. Claiming the people are morons, by the way, isn't very democratic. You can't be the populist party while condemning the beliefs of the populace.
2. Bill Clinton. You should have discovered by now that Clinton poisoned the well. Clinton was out for Clinton, but he won at your expense. Your party's reputation has been immeasurably damaged by him. Defend him at your own risk, because it will not be at his risk or his wife's risk.
UPDATE: My commenters SuperG and Harry seemed to have taken this as more Democrat bashing. I'm actually trying to be helpful. It turns out my initial fears when I wrote this post were well-founded; this post was seen as a post-election attack on Dems. (In fact, I pulled an earlier version of the post for just that reason.) So if this came across as excessively partisan or as condescending, I'm sorry.
I remind you that I am a former Democrat and to a certain extent my heart will always be with the Democratic Party. The Dems used to have a super-majority and for nearly 40 years owned the House of Representatives. They've lost a tremendous amount of ground just in the past 12 years. There's a reason for that.
There's a reason people like me who were lifelong loyal Dems left. I'm just trying to help explain why. If you don't listen or just cross-accuse the GOP, you're missing the point. Many of us would like to come home; we're exiles in the Republican Party. We didn't leave because we're greedy or we're stupid or we're bloodthirsty or we're just easily manipulated by Karl Rove's evil campaign machine. There's more to it than that.