There were two possible responses to this. The first required one to re-evaluate their economic assumptions. This is the route Alan Greenspan took. "Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief" Greenspan told a Congressional Committee in Oct, 2008. Although the regulations he proposed adding were modest, at least he showed some willingness to re-evaluate his position when presented with new evidence.
The second approach shows no such willingness. The vast majority of conservatives went with the double down option. The conservative approach of low taxes for high income earners and deregulation of business didn't work, according to this approach, because G.W. Bush was simply too timid in his conservative policy prescriptions. This is the approach is taken by virtually all GOP elected officials and presidential candidates. It is a continuation of a trend recently noted by Paul Begala.
The story of the Republican Party in the last half century is a nearly unbroken march to the right. Nixon was more conservative than Eisenhower. Goldwater was more conservative than Nixon. Reagan was more conservative than Goldwater. Gingrich was more conservative than Reagan. And George W. Bush was more conservative than Newt.Among the current crop of GOP candidates for president, even Romney--the candidate least trusted by conservatives to carry their standard--offers policies that are more conservative than Bush's. As Ezra Klein points out, Romney wants to retain the Bush tax cuts, and then add even more. And Romney is the least extreme among the candidates.
Clearly, this trend cannot continue indefinitely. GOP leaders are already out of step with the Republican rank and file when it comes to tax cuts. A majority of ordinary Republicans favor raising taxes on high income earners as a way to shrink the deficit. Yet amongst GOP leaders this is an apostasy.
