A generation ago, fresh off the second biggest electoral landslide in American history, Ronald Reagan surveyed the wreckage that had been the opposition and declared victory. Standing before 1,700 true believers at the 1985 Conservative Political Action Conference (CPAC), he proclaimed, "The tide of history is moving irresistibly in our direction. Why? Because the other side is virtually bankrupt of ideas. It has nothing more to say, nothing to add to the debate. It has spent its intellectual capital." At this year's conference two weeks ago, Reagan's name was invoked more than anyone else's. But the mood at the most storied annual gathering of conservatives was anything but triumphal. John McCain, the Establishment favorite to win the 2008 Republican nomination, skipped CPAC entirely but did show up on David Letterman the night before, choosing the most aggressively glib venue to semiofficially announce his candidacy. Former Massachusetts Governor Mitt Romney was there to make his pitch for 2008 but had to compete with a man who was working the crowd in a dolphin costume and a T-shirt identifying him as "Flip Romney: Just another flip flopper from Massachusetts." Ex-New York Mayor Rudy Giuliani barely mentioned the social issues on which he parts ways with conservatives, except to joke, "I don't agree with myself on everything." And the only memorable sound bite of the whole affair came from right-wing telepundit Ann Coulter, whose idea of an ideological rallying cry was to declare Democratic hopeful John Edwards a "faggot." The condemnation that followed, in which at least seven newspapers banished her column from their opinion pages, became a ragged coda for the state of a movement that had once been justly proud of its ability to win an argument.

These are gloomy and uncertain days for conservatives, who — except for the eight-year Clinton interregnum — have dominated political power and thought in this country since Reagan rode in from the West. Their tradition goes back even further, to Founding Fathers who believed that people should do things for themselves and who shook off a monarchy in their conviction that Big Government is more to be feared than encouraged. The Boston Tea Party, as Reagan used to point out, was an antitax initiative.

But everything that Reagan said in 1985 about "the other side" could easily apply to the conservatives of 2007. They are handcuffed to a political party that looks unsettlingly like the Democrats did in the 1980s, one that is more a collection of interest groups than ideas, recognizable more by its campaign tactics than its philosophy. The principles that propelled the movement have either run their course, or run aground, or been abandoned by Reagan's legatees. Government is not only bigger and more expensive than it was when George W. Bush took office, but its reach is also longer, thanks to the broad new powers it has claimed as necessary to protect the homeland. It's true that Reagan didn't live up to everything he promised: he campaigned on smaller government, fiscal discipline and religious values, while his presidency brought us a larger government and a soaring deficit. But Bush's apostasies are more extravagant by just about any measure you pick.

Set adrift as it is, the right understandably feels anxious as it contemplates who will carry Reagan's mantle into November 2008. "We're in the political equivalent of a world without the law of gravity," says Republican strategist Ralph Reed. "Nothing we have known in the past seems relevant." At the top of the Republican field in the latest TIME poll is the pro-choice, pro-gay-rights former mayor of liberal New York City. Giuliani's lead is as much as 19 points over onetime front runner McCain. But neither Republican manages better than a statistical tie in a hypothetical matchup against the two leading Democrats, Hillary Clinton and Barack Obama.

Giuliani's lead in the early polls doesn't necessarily mean the Republican race is getting any closer to the kind of early coronation the party usually manages to engineer. A New York Times/CBS News poll out this week found that nearly 6 out of 10 Republican primary voters who responded said they were unsatisfied with the choice of candidates running for the party's nomination; by comparison, nearly 6 in 10 Democrats pronounced themselves happy with their field. The Democrats were also far more confident in the future. Whereas 40% of Republicans predicted the other party would win the White House next year, whomever it nominates, only 12% of Democrats felt that pessimistic about their chances. Then there is the real worry that the whole exercise might already be a lost cause. "In this environment, nobody looks good if you have an R by your name. It doesn't matter who you are," says a Republican campaign consultant in the Midwest. "I don't see how that changes between now and Election Day. It's the war; it's huge. It's just huge."

The Iraq war has challenged the conservative movement's custodianship of America's place in the world, as well as its claim to competence. Reagan restored a sense of America's mission as the "city on a hill" that would be a light to the world and helped bring about the defeat of what he very undiplomatically christened "the evil empire." After 9/11 Bush found his own evil empire, in fact a whole axis of evil. But he hasn't produced Reagan's results: North Korea is nuclear, Iran swaggers across the world stage, Iraq is a morass. "Conservatives are divided on the Iraq war, but there is a growing feeling it was a mistake," says longtime conservative activist and fund-raiser Richard Viguerie. "It's not a Ronald Reagan?type of idea to ride on our white horse around the world trying to save it militarily. Ronald Reagan won the cold war by bankrupting the Soviet Union. No planes flew. No tanks rolled. No armies marched."

Then there are the scandals and the corruption. The dismay that voters expressed in last fall's midterm election was aimed not so much at conservatism as at the G.O.P's failure to honor it with a respect for law and order. And now that subpoena power gives the Democrats their first chance to shine a light into the crevices of an Administration and its very unconservative approach to Executive power, the final years of Bush's presidency are likely to be punctuated by one controversy after another. The past weeks alone have produced a parade of revelations: leftover questions about Vice President Dick Cheney's role in the I. Lewis "Scooter" Libby case; the betrayal by neglect of the war wounded at Walter Reed Army Medical Center and veterans hospitals across the country; the connected dots showing that the White House and the Justice Department exploited the post-9/11 USA Patriot Act, of all things, to engineer a purge of U.S. attorneys across the country.

Conservatives are in many ways victims of their successes, and there have indeed been big ones. At 35%, the top tax rate is about half what it was when Reagan took office; the Soviet Union broke up; inflation is barely a nuisance; crime is down; and welfare is reformed. But if all that's true, what is conservatism's rationale for the next generation? What set of goals is there to hold together a coalition that has always been more fractious than it seemed to be from the outside, with its realists and its neoconservatives, its religious ground troops and its libertarian intelligentsia, its Pat Buchanan populists and its Milton Friedman free traders? That is why the challenge for Republican conservatives goes far deeper than merely trying to figure out how to win the next election. 2008 is a question with a very clear premise: Does the conservative movement still have what it takes to redeem its grand old traditions — or, better, to chart new territory?

There was a time when John McCain would have seemed the most natural heir to Reagan. It was Reagan who first introduced McCain to a conservative audience — ironically enough, given McCain's conspicuous no-show this year, at CPAC's 1974 conference. McCain was one of three former Vietnam POWs in attendance. With their release, Reagan said, "this country had its spirits lifted as they have never been lifted in many years." Twenty-five years later, McCain was a fiscal conservative and security hawk serving his third term in Barry Goldwater's old Senate seat when Nancy Reagan picked him to accept the American Conservative Union's Conservative of the Century Award on behalf of her husband, who was too incapacitated by Alzheimer's to do it himself.

But the right's view of McCain changed when he ran for President in 2000. What bothered conservatives wasn't just the fact that he challenged the Anointed One in a party that treats its primaries like a royal accession. It was also the glee with which he went after all its institutions, from the special interests to the theocrats to Big Business. "Remember that the Establishment is against us," he exulted after winning the New Hampshire primary. "This is an insurgency campaign, and I'm Luke Skywalker." Then again, as both Reagan and Goldwater showed, there is nothing more fundamentally conservative than an insurgency.

On his second try, McCain seems to have become much of what he used to fight against. The deficit hawk who had opposed Bush's tax cuts voted to extend them. The apostate who counted the Rev. Jerry Falwell among the "agents of intolerance" seven years ago delivered the commencement speech at Falwell's Liberty University last May. Ask the candidate what his message is this time around, and he tells TIME, "Experience, background, record and vision. Who is best capable to address the challenge of the 21st century, which is the threat of radical Islamic fundamentalism?" But what about reform? These days McCain has to be prompted on that one, which he lumps into "all of those things."

McCain veterans insist their candidate hasn't changed, just his prospects. "The key difference is, hopefully, this is a winning campaign," says his chief strategist John Weaver. Trying to rekindle the old magic, they rearranged his schedule to put him back on the Straight Talk Express bus this month. But that could distract him from another goal in this critical period: building up his campaign coffers so that he has the financial muscle of a front-runner when the tallies are released for the first reporting period, which ends March 31.

Certainly, McCain's operation has an institutional feel, for better or worse. Whereas he ran his 2000 campaign from shabby offices with a single toilet, McCain 2.0 is housed on the 13th floor (superstitiously identified by the building as the "M" floor) of a soulless office high-rise in northern Virginia. McCain's 2000 campaign was a free-for-all, but his 2008 operation is more conventional, with far more hands on the wheel.

Being embraced by the Establishment isn't such a good thing when the Establishment is in disrepute. And on the biggest issue on which McCain has shown backbone and hasn't wavered — his support for the war and Bush's troop buildup — he happens to find himself on the opposite side of the fence from 72% of Americans in the latest TIME poll.

If McCain is playing up to the right, it's not working all that well. He is still at odds with the conservative base: flexible on immigration, opposed to a constitutional amendment banning gay marriage and dedicated to preserving the Senate's right to filibuster judicial nominees. "The problem with McCain, and I don't know how he fixes it," says evangelical leader Richard Lands, "is that he's so unpredictable. What makes him appealing to independents makes him worrisome to social conservatives. They say, 'Yeah, he's pro-life, but will that have anything to do with who he nominates to the Supreme Court?' People don't like unpredictability in candidates."

But then the only person who beats McCain in the polls is even further out of line with conservatives. Just out on YouTube is a 1989 video, which quickly made its way to the Drudge Report, in which Giuliani declares, "There must be public funding for abortions for poor women. We cannot deny any woman the right to make her own decision about abortion because she lacks resources." Also getting fresh play are the unsavory details of his second divorce (familiar to anyone who picked up a New York City tabloid at the time): Giuliani's wife got the news that they were splitting when he announced it at a press conference, and then the couple squabbled over whether she or his mistress would get to stay in Gracie Mansion, the mayor's official residence. Now there is an additional, painfully raw story line about how his third marriage has left him estranged from his children.

What draws conservatives to Giuliani, though, are his other qualities: the leadership and strength he showed as New York City's mayor on 9/11; his record transformation of a crumbling, crime-ridden city into a safe and clean one; and the need for that kind of toughness in a dangerous world. Giuliani is talking to conservatives now in a language they want to hear. He promises that whatever his personal views, the judges he appoints as President would be "strict constructionists" in the mold of Supreme Court Justices Antonin Scalia and John Roberts, which is generally understood to mean against abortion and gay marriage.

Romney, meanwhile, has taken a whisk broom to his record in liberal Massachusetts, where he twice ran for statewide office as a pro-choice candidate dedicated to "full equality for America's gay and lesbian citizens." He now says he opposes Roe v. Wade and describes himself as "a champion of traditional marriage." In Massachusetts, he bucked the National Rifle Association by supporting the Brady Bill and an assault-weapons ban, boasting, "I don't line up with the NRA." Lately he brags that he has joined the gun-rights organization as a life member. He did that in August.

Romney registers a meager 9% in TIME's poll of Republicans, but there are plenty of signs that conservatives are trying to overlook his past and fall in love. He won the straw poll at CPAC, and the endorsements are piling up. Romney has also picked up much of the political operation of Jeb Bush, who is the could-have-been candidate most longed for on the right. Money doesn't seem to be a problem either; Romney raised $6.5 million on a single National Call Day in early January. The campaign is flush enough to be on the air at this early date with ads to introduce Romney to voters as a "business legend" who "rescued the Olympics" and "turned around a Democratic state." The Mormon in the race also points out — jokingly, but with an edge — that he is the only leading contender who is still with his first wife.

Some on the right have been keeping a light in the window for the last conservative to have led a revolution. Newt Gingrich recently confessed his past marital infidelity on the Christian radio show of James Dobson, admitting he was carrying on with the House aide who became his third wife even as he was lambasting Bill Clinton over the Monica Lewinsky scandal. In the upside-down leap of reasoning that this campaign season has wrought in the movement, hanging his dirty sheets from the window was enough to convince everyone that Gingrich is running — and landed him an invitation from Falwell to be this year's Liberty University commencement speaker. "He has admitted his moral shortcomings to me, as well, in private conversations," Falwell wrote in his weekly newsletter. "And he has also told me that he has, in recent years, come to grips with his personal failures and sought God's forgiveness."

It's no wonder that other potential Republican candidates, Senator Chuck Hagel of Nebraska and former Senator turned television star Fred Thompson, are deciding that they can afford to wait a while before making up their minds. There is a full lineup of conservatives who are already in the race and looking for lightning to strike: Kansas Senator Sam Brownback, former Arkansas Governor Mike Huckabee and California Congressman Duncan Hunter, to name just a few. Many conservatives say a long election season offers the advantage of letting conservatives work through their doubts about their options for 2008, especially when they turn their attention to November. "When it's Hillary vs. Giuliani," asks antitax activist Grover Norquist, "who's going to vote for Hillary?" But others on the right say they are looking at this election as a write-off. "I'm not focusing on 2008," Viguerie says. "Realistically, it will probably take until the year 2016" before the movement regains anything resembling its former glory.

And where will those new ideas and leaders come from? In this magazine, conservative columnist William Kristol has cited two possible sources, both of which focus on the very middle-class voters that Reagan so successfully peeled away from their Democratic moorings. In a forthcoming book, conservative authors Ross Douthat and Reihan Salam identify these voters as "Sam's Club Republicans," who could benefit from market-friendly health-care and tax policies that are aimed at families and especially at at-home parents. Another conservative thinker, Yuval Levin of the Ethics and Public Policy Center, argues along a similar vein with a set of policy proposals that he calls "Putting Parents First." Bush's signature approach to domestic policy fell short in that regard, Levin wrote in the Weekly Standard. "Compassionate conservatism, for all its virtues, does not even try to address itself to parents. A conservative agenda that did so would not only cement a relationship with these voters, it would also appeal to many with similar worries who do not share the strong cultural predilections that have drawn middle- and lower-middle-class parents to vote for Republicans."

The Gipper would probably have had little patience for all the fretting his party is doing over its brand. But he also understood, because he embodied the idea, that progress comes from going up against the status quo. To become "creators of the future," as he called his compatriots, he might have suggested that they look back to their past.

—with reporting by Jay Carney and Michael Duffy/Washington and Nancy Gibbs/New York

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