There is a Difference Between Losing Some Elections and Losing Your Country

Unlike Sarah Palin, I won't whine and snivel about wanting my country back.  There are no tanks in the streets, no midnight knocks on the door, and we didn't even completely lose this election.
There is a huge difference between being a minority party and an outlawed one, as is the case in China or Egypt, for example. 
The Republicans will probably obstruct, but since they control the agenda of the House, they will be expected to do something other than just say no.  Gingrich found this out the hard way when he shut down the government, losing his job and his majority in the process.

At any rate, Democrats still control the Senate and the White House.  

So those of us who believe in those radical progressive concepts such as insuring our children or fully funding the obligations we have to the least among us should all cheer up.
It is natural for the incumbent party to lose seats in the midterm election.  The  proportion of this loss is directly proportional to the unemployment rate.
The Republicans, if they are smart (and many are), will put away the champagne and look at how they managed to snatch defeat from the jaws of victory in several key races.  Perhaps they will realize that running right wing nut jobs like Christine O'Donnell and Sharron Angle is a bad substitute for a strategy.  Sarah Palin and the Koch brothers might have a little less influence in 2012 than they had in 2010.
  
Ironically, this could be bad for the Democrats, since the Republicans are less likely to run an unelectable extremist, but good for the country, since even an unelectable extremist can drag the political discourse into the mire, as Palin's addition to the McCain ticket illustrated.

At any rate, reading too much into the Congressional races to glean hints of the 2012 presidential race is dangerous.  Most of the anger of Americans is with Congress (over 70% disapprove) not with the president (who enjoys about evenly split approval to disapproval, something Bush with mid-teens approval ratings could have only dreamed of).  

Since there is no evidence that the economic cycle has been abolished, it is highly likely that the economy will be roaring by 2012.  If so, discontent with the Presidential and Senate incumbent party will be lower (although watch Republicans try to take credit for the recovery from the recession that they created under Bush and that ended (according to economists) under Obama before election day).   That recovery plus the inevitable disillusionment that will follow from sending telegenic, tea bag-waving rabble rousers to Washington  will likely undo some of the damage done yesterday to the progressive cause.
The Dems did a poor job of getting out a simple message and repeating it often.  In contrast, this is the core of the Republican strategy. Democrats should have trumpeted the many meaningful things they got done:
 -  Healthcare reform has been unsuccessfully tried for the better part of a half century; President Obama and the Democratic Congress got it done in under 2 years despite a vicious right wing smear campaign and Sarah Palin's fabricated death panels.  

 - President Obama delivered on his campaign pledge to end our combat mission in Iraq. 

 - Democratic Congress passed meaningful financial regulatory reform that protects consumers and makes a future financial melt-down and bailout less likely.

 - President Obama turned around what could have been a complete meltdown of the Western financial system by injecting billions of liquidity into the system; many economists believe unemployment would be 20% and the economy in far worse shape had Obama not continued the Bush-Paulson bailout that the Tea Party successfully blamed him for.

Like the stock market, politics follows a sometimes volatile trajectory but the longterm trend is up.  Just think:  only 6 years ago, Republican strategists were able to use homophobia as the central pillar of their campaign strategy (distracting people with gay marriage prohibition amendments when we should have been talking about Abu Ghraib).  Now we know that many prominent Republicans are gay and homophobia does not sell to most voters anymore, even conservative ones (Sarah Palin tried to ban a library book on homosexuality from her local library when mayor but hardly mentioned the subject this election cycle).

If history shows anything it's that Americans swing wildly from one election to the next.  Nothing is ever over.  If people are still out of work in 6 months to a year, they will demand results from Boehner.  All the platitudes about getting government off their backs mean nothing to the guy who lost his job and is losing his house and (thanks to Boehner if his threats to "kill" healthcare reform are delivered) his health insurance.  A tax cut does you no good if you have no taxable income and hopefully many Americans will understand that campaigning for massive tax cuts they will never enjoy does them no good if their neighborhood is losing cops, firemen, and teachers.
Progressives needs a pit bull - imagine a Karl Rove or Sarah Palin but with ethics.  This should not be hard, since we enjoy a huge advantage:  as Stephen Colbert once lamented, reality has a well-known liberal bias.  The truth is on our side.  We don't have to lie to make the other side look ridiculous.
Advocating tax cuts while howling about the deficit makes no economic sense.   Saying tax cuts pay for themselves when they clearly haven't makes no sense.
Saying that giving people tax deductions to offset taxes they don't pay anyway to buy health insurance they can't afford from for profit companies who won't insure them makes no sense.
Saying that the world is only a few thousand years old and our 99% genetic congruence with chimpanzees is a wild coincidence and that we should teach this to our children in science class makes no sense.
Saying that oil companies and coal mining companies and hedge funds should get to self regulate when clearly they have never been able to do this makes no sense.
Calling a centrist president who has been friendly to a fault to a for-profit insurance industry a Marxist-Leninist makes no sense.
It is not enough to say this once; we have to hammer it home at every opportunity.  That's what Republicans do; they take a message, even an inherently dishonest or nonsensical one (that more tax cuts will help balance the budget, for example) and repeat it ad nauseum until people at the margin absorb it.
So it will be easier in some ways to hold the Republican sound bites up to scrutiny because they will have a living laboratory in which to put up or shut up.  No more chanting "treason!" or "kill him!" from the sidelines.  They are controlling part of the government so many of them have ranted against in the most graphic terms, describing it as a "beast" that needs to be drowned or  bludgeoned.
Of course, turning a government over to those who hate it gives them an opportunity, as did Bush and Cheney, to illustrate how inept government can sometimes be.
Let's hope the voters - and the surviving Democrats - hold them to account.