At his post-election press conference President George W Bush told it like it was. The American people had just handed him, and his party, ‘a thumpin’’. Some days later, Karl Rove demurred. If 77,611 Americans had voted differently, the Republicans would have held on to their majority in the House of Representatives. The 2006 Congressional elections were, he mused, ‘more of a transient, passing thing’. Who was right?

There is much to support the ‘thumpin’ thesis’. The results exceeded all but the most optimistic Democrat expectations. At the beginning of the summer few thought that there was much chance of winning back either house of Congress. With a week to go, the Senate still looked comfortably out of reach. Even in the hours beforehand most commentators still thought winning both houses unlikely. When Senator-elect Jim Webb lifted his trademark combat boots aloft at his victory rally in Virginia, his party rightly celebrated a remarkable, improbable victory.

The figures behind the Republicans’ ‘thumpin’’ look even better. Democrats won the overall vote 53 to 45, a huge margin for a party that rarely wins a majority of the national vote. They won in a year dominated by national security, traditional fertile ground for Republicans. Democrat vote share went up for nearly every conceivable group. In particular, independent voters swung their way, and the party sharply extended their lead among the demographically vital Hispanic minority. And the result was all the more impressive for overcoming rampant gerrymandering and a Republican head start in fundraising, campaign organisation and voter mobilisation.

The ‘thumpin’ thesis’, however, has it weaknesses. Individual candidates fought like trojans. But the Democratic party didn’t thump anyone. Instead, they largely stood by and watched as the Republicans thumped themselves, and were thumped by events in the Middle East. In short, this was an election that the Republicans lost. Their record of governance was too dreadful to ignore. Iraq was not working. Katrina had fatally damaged the party’s record for competence. Americans felts they were not getting ahead, despite a growing economy. And the Mark Foley scandal simply confirmed the image of Republicans as the party of corrupt politics-as-unusual. One Republican campaign guru put it well: ‘They campaigned against the cesspool in Washington. After a while they looked around and said, “Hey, this isn’t a cesspool, it’s a hot tub.”’

Post-election polling confirmed, however, that it was the worsening situation in Iraq that drove the election. It was crucial for three reasons. First, it killed the core Republican ‘stay the course’ versus ‘cut and run’ campaign message. So clearly ludicrous did ‘stay the course’ become that President Bush was forced into a humiliating reversal with only weeks to go. Despite being far more divided than their opponents, Democrats had managed to unite around the need for a ‘new direction’. They agreed a basically meaningless policy, variously known as ‘strategic redeployment’ or ‘phased withdrawal’. And, in the end, they were just united enough to take advantage of events.

Second, Iraq derailed the Rove spin machine. Realising that national security was not a winning issue, the Republicans constantly tried to jolt the news agenda away from the war. The President made big speeches talking up the economy. His functionaries launched racy adverts claiming Democrats would raise taxes. A big song and dance was made about terrorist threats around the time of the 9/11 anniversary. And, with not a little desperation, the entire party dropped everything to pummel the unfortunate John Kerry, following his botched joke. None of it worked. Stories of chaos in Iraq came rushing back.

Lastly, in the final stretch, events in Iraq helped the Democrats, belatedly, locate their foreign policy backbone. Junking tangential themes (like providing body armour to the troops and paying veterans benefits) they went all out against Bush. In one of the outstanding adverts of the cycle, a series of veterans – some missing limbs – joined General Wesley Clark in linking terrorism, security and the Middle East under the simple slogan: ‘It’s because of Iraq’. And so it was for the election. The Republicans lost because of Iraq.

Democrats do deserve some credit, mostly for not screwing things up. They picked good candidates. Their national campaign was smart and aggressive. It matched the Republicans’ ad for ad, and dollar for dollar. Ground was made up against their opponent’s formidable turnout machine. Most importantly Democrats managed to unite themselves, campaigning on popular issues like raising the minimum wage and sacking Donald Rumsfeld. They didn’t drop the ball. Not dropping the ball, however, is hardly the same as a ‘thumpin’’.

Where does all this leave us for 2008? There are some big positives. They won, and take momentum into the next campaign. These election results strongly suggest that the party has the beginnings of a winning electoral-college formula focusing on the traditionally blue north east and mid-west, and the emerging blue states in the American south and mountain west. And in Hillary Clinton, Barack Obama and John Edwards they have three genuinely impressive presidential candidates.

Obama, in particular, is a fascinating prospect. Reading his thoughtful, inspiring autobiography it’s difficult to avoid the conclusion that the Democrats have a once-in-a-generation talent on their hands. His personal story is compelling, while this election proved again his rock star status. Most enticingly of all he embodies the possibility of a new type of post-baby boom politics: a future beyond Vietnam, racial tension and the damaging social wedge issues that have divided America for a generation. (My hunch? If Obama runs, and I think he will, he will beat Hillary to the Democratic nomination.)

The Republican field, meanwhile, is weak. President Bush is hopelessly unpopular, with post-election ratings barely scraping 30 per cent. To make a success of his final two years he must work across party lines, something for which he has shown little aptitude. And events favour the Democrats, too. The situation in Iraq shows no signs of getting better. The economy is slowing sharply. And America is clearly ready for a change.

This should make Democrats favorites to win. But they aren’t, for two big reasons. First, the party doesn’t know what it believes. Bush might have messed things up. But his party retains a simple, coherent philosophy: low taxes, small government, family values, and strong defense. The Democratic victory of 2006, by comparison, combined a timid combination of crowd-pleasing policy tinkering and bland unity positions. The 1994 Gingrich revolution this is not. Democrats might have won this election by staying united, but eventually they have to come up with a coherent agenda for America’s future. It isn’t unkind to say that the party has nothing approaching such an agenda. In particular, they have nothing approaching a coherent view on the security and economic dimensions of globalisation, the two critical issues of our time.

The second problem is John McCain. It is difficult to exaggerate how strongly he alone skews the electoral calculus. The real trick to understanding the 2006 election, and the next, is to imagine a world without McCain. In such a world the edifice of conservative governance would lie in a smoking ruin. There would be no strong Republican presidential candidate, no nationally respected Republican leader, and no one on the right who could plausibly escape Bush’s shadow and resurrect Reaganite conservatism. Yet with McCain in the picture all of this is possible. If Democrats can’t find a way of ‘thumpin’’ him, this election will have been a transient, passing thing after all.