The Reagan conservatism is withering because of its obvious failure to achieve its goals, but it is also failing as the demographics of this nation are changing. Reaganism was based on the dominance (number-wise) of white protestant males and a few misguided females over all other single groups, so that socially it did not have to worry about fighting racism or sexism. It embraced both, and embraced all forms of bigotry against people not of the dominant group--male, white, non-gay, protestant or at least Christian, etc.
That can no longer win, as even W had begun to accept, with his early attempts to win black and Latino/a voters by appointing Rice, Powell, Gonzales, etc. Still, W's changes were superficial appointments of token minorities acceptable to the traditional Republican base. Honestly, I give him credit for that, because he did break down a few barriers. Every time one of the hurdles is crossed, we no longer have to fight the battle again. Can a black quarterback succeed? Warren Moon answered that. Can a black quarterback win the Super Bowl? Doug Williams. Can a black general rise to the highest post in the military and be followed by white subordinates? Colin Powell. The questions themselves are stupid, but many people still ask them until they are answered, and once answered, the question goes away. In a small way, Bush, not really intentionally, helped Obama by wiping away a few more questions about race and leadership in the minds of the most hesitant whites in America. Bush didn't do much, and his actions on the economy and Katrina and his wars and a host of other arenas certainly were destructive to the cause of equality. But he did do something. That's better than Reagan. Bush overall, though, followed Reagan's brand of conservatism.
That just won't work anymore. In terms of wealth and numbers, white males are not as clearly dominant anymore. So conservatives will have to change their basic assumptions on society to have a chance of winning, or having anyone listen to their message.
Liberals, though, are having to change, too. Or at least, the Democratic Party will have to. The old Democratic Party and the old liberal ideology worked on the assumption that non-whites had to be saved. They had to be pulled up to equal with whites. Past travesties had to be overcome, forcibly. Segregation had to be ended, education had to be universal, discrimination in housing and the workplace had to be destroyed. Now, with white power becoming weaker, and with the hardest edges of blatant, government-enforced racism being weakened (we still need major prison/law enforcement reform, though), the battles are changing. It's now more of a question of how to integrate than how to desegregate. And white arrogance has to yield to the realization that whites no longer have to save non-whites, but now have to include them, even consider them as superiors in many situations. Liberalism on social issues also is changing, as our current primary proves.
In the past liberals wanted to see a black president, or a female president, but there was always an attitude that we would have to sort of help them out, elevate them, help them get elected. You know, white man's burden stuff. Now we have Obama and Clinton, both of whom kicked in the political door and said "Screw that, I'm not waiting for you to appoint me, I'm just taking the job." Liberalism isn't just for white people anymore. (It never was, but you see what I mean, I hope).
With the changing social conditions, other lines will be redrawn. African Americans have for decades voted almost exclusively Democrat, and and white liberals have made the mistaken assumption that this meant blacks were more liberal than whites, or that most African Americans were liberals, even progressives, at heart. Obviously this isn't true--African Americans have ideologies as diverse as white folk, but the larger issues of inclusion and equality made them vote with the Dems, even when the Dems moved too slowly and too incompletely. Now, though, that's changing. If Obama wins, it will be because black voters put him in office, and white Democrats went along for the ride. African American ideological diversity (and I haven't even gotten into Latino/a diversity and its impact on the party) may start to change the party from within, moving the party more to the center or even the right on some issues, while moving it to the left on many social issues.
Anyway, you get the idea of what I'm saying. Both parties are going to shift, and not just to the left or right. Some issues will realign, so that both parties shift to the right on some and the left on others, and the whole meaning of right and left will realign. It's happening now, and it's happening fast. Don't just look at Clinton and Obama, look at Ron Paul. Here's a right wing conservative against all forms of government spending. This causes him to oppose aid to Katrina victims--a conservative view--and to vehemently oppose the Iraqi war--a very progressive view.
The Republicans chose McCain over the religiously conservative Huckabee and the economically conservative Romney and the diplomatically conservative Giuliani. McCain is a moderate--not moderate enough for our tastes, of course, but for the Republican Party, he is. He had to make some conservative promises, of course, but he's not an extremist on most Republican issue--he just leans to the right, without rushing against the wall. Reaganism is dead, in that regard.
We are going to choose Obama or Clinton. Neither is a true leftist, both are basically moderates. We have two moderates leaning left battling to face a moderate leaning right. The extremes are being ignored because the extremes do not have clear enough identities to dominate an election, or to vote as a significant block. The extremes don't work anymore, for either party. That won't last, it just means those on the left and the right will have to reevaluate, and discover what they still agree on. But for now we are in a drastic ideological shift, reminiscent of the 30s or the 60s, when changing realities wiped away entrenched ideologies. Some of the ideologies never changed, but many shifted. It's why some people say that the parties switched from liberal to conservative and vice versa.
I know no one's still reading.

I just like to babble. Probably wrong, as usual.