The implosions of the national candidacies of Sarah Palin and Mark Sanford raise again the question: Who the heck the Republicans can possibly come up with for 2012 that would be even a glimmer of a threat to a second Obama Administration? At this point, the base scenario, assuming Obama remains healthy and untouched by serious scandal, and that the economy begins to show serious recovery by 2011, would be: Nobody.
Only a split in the Democratic party, which I consider likely in the longer run(especially if the Republicans continue to weaken) but very unlikely in the next 3-5 years, would give the GOP a chance for a freakish Electoral College victory with a 35-45% share of the popular vote. One could say a Third Party could provide the necessary fragmentation of the solid 50-60% share the Democrats should otherwise expect in '12, but that would amount to the same thing--a split among the Dems--because there is no real 3rd today, and something coming out of the Republicans would only make their calamity worse. A John Anderson-like moderate Republican could easily emerge but would not be a significant factor. No, what would be needed for a real contest would be either a major disaffectation among the Left (due to unfulfilled promises) or the Right (due to Obamadmin's refusal to address untrammelled deficits).
The Republicans have a real option to generate new interest for their party, though, if they were to nominate none other than Ron Paul in 2012. He wouldn't win, of course, but his candidacy could be a Goldwater-like principled stake in the ground that could pay enormous benefits for their remaining a relevant party in the future, a future when we can easily envision rampant inflation, uncontrolled deficits, higher taxes, the financial endangerment of entitlement programs like Social Security and Medicare, etc. In such an environment--which might only be 8-10 years away--Paul's warnings about the Federal Reserve, relentless printing of money, endless war, and intrusive finagling with the private economy could be seen as prophetic and convincing.
The wisdom among Mainstream journalists is that "libertarian" politics have been dealt a death blow by the failures of absent regulation of the banking community evidenced in the financial crisis last year. I see it differently: the "laissez-faire" stance toward collateralized debt obligations and other fancy off-balance sheet practices was indeed right at the heart of the problem, but the move for greater regulation hasn't caught fire nor convinced anyone that we will thus prevent the next disasters. The "moral hazard" problem of guaranteed mortgages, and where to draw the lines with them for government-underwritten institutions in our future, is also right at the heart of the matter, and here the libertarian argument scores.
Besides, libertarian politics ranges much wider than just government hands-off big business, though it does seem to include that. The focus for them is much more on the small enterprises and their free operation--still very popular, and that will be getting broad support in the months to come--along with other topics likely to be popular like reducing government debt, ending our involvement in South Asian wars, and ending the costly and ineffective war on drugs (Obama seems to be dragging his heels a bit on this one, though there's still hope he won't let it get away from him).
Paul would do well to keep a relatively low profile, polish his policy stances for current events, make sure he's still accepted by county-and-state-level party hacks (the Washington ones don't matter to him at this point), and campaign vigorously and selectively for 2010 Congressional candidates who would be willing to support him if he helps them. And he can--with fund-raising, organizational support, Internet campaigns--all those areas that the regular party is failing to do and will need to do if it is to survive.