Republicans lost the governorship of Kentucky and the state senate in Virginia last week. But the elections were not as bad as they looked for Republicans. Knocked down and trampled on by Democrats in 2006, Republicans are at least back on their feet in 2007.

The Democratic trend in Virginia, especially in the suburbs of Washington and urban centers of Hampton Roads, was the most discouraging aspect for Republicans. It reinforced the likelihood that former Democratic governor Mark Warner will win the seat of retiring Republican senator John Warner next year and suggested the long Democratic drought at the presidential level might be ending.

The last Democrat to win Virginia was Lyndon Johnson in 1964. Bush won the state in 2004 by 8 points. "The right Democratic candidate can win Virginia," Governor Tim Kaine said last week. "The wrong Democrat can't." Kaine, a Democrat, has endorsed Barack Obama for the Democratic presidential nomination.

Taking into account Republican Bobby Jindal's election last month as governor of Louisiana and the strong (but losing) performance of Republican Jim Ogonowski in a special House election in a heavily Democratic district in Massachusetts, Republicans are in considerably better shape now than a year ago.

The Republican brand. It is far from what it once was, particularly in Virginia, but it appears to be gradually regaining respectability. The most startling example was the upset victory of Greg Ballard as mayor of Indianapolis. Badly outspent and lacking strong name identification, Ballard knocked off a two-term Democratic incumbent.

In Mississippi, Republicans made serious inroads. Governor Haley Barbour was re-elected with ease, and Republicans took all but one statewide office. In Louisiana, Republicans have a chance to win the state house in next week's runoff election. They must win 11 of 16 races, an unlikely event, but not impossible either since Katrina drove more than 100,000 Democrats from the state.

Better yet, Republicans have a candidate in Louisiana to challenge Democratic senator Mary Landrieu in 2006. This is John Kennedy, who recently switched parties, and was unopposed in his re-election as state treasurer.

Taxes. The tax issue--no, the anti-tax issue--wasn't a factor in the 2006 election, but it's coming back. Republicans desperately need it. It's the one issue that binds Republicans of all ideological stripes while also attracting independents and soft Democrats.

Ballard's victory in Indianapolis was spurred by his opposition to raising property taxes and to a county income tax. In Washington, a generally blue state, voters rejected two referendums to increase taxes and passed another bolstering the legislative super-majority required to enact a tax hike. In Oregon, voters refused to raise cigarette taxes to pay for child health care.

The Democratic presidential candidates have helped revive the tax issue by insisting on letting the Bush tax cuts expire. And the Democratic chairman of the House Ways and Means Committee, Charles Rangel, has proposed a 4 percent surtax on high earners.

New Republican faces. There aren't many, but then only a few states hold elections on odd years. The most important newcomer is Jindal, 36, one of the most impressive Republicans in the country. He is both a policy-generating machine and a smart politician. Jindal is bound to attract national attention.

Immigration. This issue continues to be far less of a vote-grabber than Republicans believe. Advocating a tough crackdown on illegal immigrants "helped in a few places but not statewide" in Virginia, said Larry Sabato of the University of Virginia. Republican Congressman Tom Davis said the issue may have saved two seats in the state house of delegates, which remained in Republican control.

Whether Republicans hurt themselves among Hispanic voters statewide is unclear. In his campaign for governor in 2005, Republican Jerry Kilgore emphasized a policy of denying any state aid to illegal immigrants. The issue didn't work and he lost to Democrat Tim Kaine.

Virginia. Republicans see two rays of hope in Virginia. Davis, whose wife lost her state senate seat, said the Republican brand is still tarnished. But Republican candidates did better in the outer suburbs of Washington and around Norfolk and Newport News than they had in 2005 or 2006. These are the fastest growing areas of the state and the areas of Republican strength.

Sabato, the leading expert on Virginia politics, believes the cycle favoring Democrats that began with Mark Warner's election as governor in 2001 may be "nearing its peak with Warner's campaign for senator" in 2006. The previous cycle, for Republicans, lasted from 1993 to 2001.

The biggest fear of Virginia Democrats is Hillary Clinton. If she wins the Democratic presidential nomination, she'll unite Republicans, drive away "swing independent moderates," and lose Virginia, Sabato says. "She'll start another Republican cycle." Republicans certainly hope so.

Fred Barnes is executive editor of THE WEEKLY STANDARD.

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