The resolution of the Fiscal Cliff represented what many during the founding of America would deem a triumph of the Republic over the Democracy. A smaller group of educated and rational men beat out a mob mentality of partisan division not conductive to compromise. In contrast, the entire lead up to the cliff was fraught with criticism of the congress and criticism of both Republicans and Democrats for failing to create a compromise sooner, and thus creating harmful economic panic in the process. However, both parties have somewhat of an excuse.
Democrats could not compromise too much without violating the desires of their constituents. At a certain point, the long-run impacts of a deal exactly as Republicans would want it was judged to violate the wishes of Democratic voters more than the Fiscal Cliff itself. In a desire to aid their voting base, at a certain point Democrats would rather accept going over the cliff or hitting the debt ceiling than accepting a fully-to-the-right compromise.
Republicans were blocked from a liberal compromise because of a trap preventing them from moving further to the left. Republicans cannot risk major compromise. If any Republican congressperson expresses an opinion or vote reflecting a desire toward compromise, a PAC can immediately run that congressperson out of office with a load of ads for a new primary challenger - which we saw in both 2010 and 2012. Thus no Republican is capable of beginning a shift back toward the middle for the party, especially given the individualization of Republican donors. Democrats receive donations from wide firms in the technology, media, or education industries. These firms have a wider set of issues they expect the politician to act on, and thus understand more flexibility in each particular issue. In contrast, Republicans benefit from individuals and the PACs they run - think of Sheldon Adelson or the Koch Brothers. These individuals tend to focus on a pet issue or cause, and engage in that issue with a passion leaving less room for compromise. Thus Democrats can afford to move toward the center while Republicans cannot.
However, there is no reason for a Republican to move more to the right than they need to obtain the support of their particular benefactors. Throughout recent elections, Republicans have been able to overcome a strong Party identification gap through a much more dedicated turnout. However, Democrats require encouragement to come out to the polls - forcing Democrat congresspeople to blend an appeal to the leftmost edges of the party with an appeal to the center.
What do the parties have to be flexible about? The answer is the increasing prevalence of voters representing youth and ethnic minorities. Republicans have not necessarily lost the battle for youth. Gay marriage and the war on drugs are increasingly being seen as state issues, separate from the federal goverment. Youth find themselves less concerned with the general recession and more concerned with the creation of jobs in an economy where a college degree is both increasingly necessary to obtain employment and increasingly unable to guarantee that employment. A focus on student loan reform or aid for unemployed graduates could easily put Democrats on the defense. However, Republicans cannot adapt the party until they have obtained the flexibility to effectively propose new policies.
The Republican party is still capable of strategic thought. The Fiscal Cliff was resolved and the Debt Ceiling is always raised, showing the capability to compromise when to do otherwise would damage the party. However, for the party to build flexibility would mandate a full overhaul in how it obtains its funding. The party must seek out a strong funding base in the sort Democrats use - one that offers funding in a more stable, if somewhat less substantial, fashion.
The GOP has been establishing the groundwork for this for quite some time. In focusing on defending small businesses, the Republican party has been courting a base with few enough donors to be fully courted by senators and representatives (who have gained extra time through not passing legislation), but enough funds and stable enough income to provide a stable and reliable base of donations. Of course, small business owners see their business impacted by such a wide variety of legislative issues that Republicans can take a more moderate stance on each such issue.
However, the issue of determining a new base of donors to turn to lies in the 2016 Presidential Election. A refocus on the part of courting small business owners and not incredibly wealthy individuals would inevitably aid some candidates in the 2016 primaries while harming others. Thus the first move to change the donation pool would become charged with intraparty politics. However, any financial planner would remind the party that the diversification of the source of income is a necessity.
The generation of flexibility within the Republican party is a necessity not only for the party but for the nation at large. Until that point, ongoing economic panic over debt ceilings will do damage to our still-recovering economy.