From Senator Tom Coburn (R, OK):

Becoming Republicans again will require us to come to grips with what has ailed our party – namely, the triumph of big-government Republicanism and failed experiments like the K Street Project and “compassionate conservatism.” If the goal of the K Street Project was to earmark and fund raise our way to a filibuster-proof “governing” majority, the goal of “compassionate conservatism” was to spend our way to a governing majority.
The fruit of these efforts is not the hoped-for Republican governing majority, but the real prospect of a filibuster-proof Democrat majority in 2009. While the K Street Project decimated our brand as the party of reform and limited government, compassionate conservatism convinced the American people to elect the party that was truly skilled at activist government: the Democrats.
Compassionate conservatism’s starting point had merit. The essential argument that Republicans should orient policy around how our ideas will affect the poor, the widow, the orphan, the forgotten and the “other” is indisputable – particularly for those who claim, as I do, to submit to an authority higher than government. Yet conservatives are conservatives because our policies promote deliverance from poverty rather than dependence on government.
Compassionate conservatism’s next step – its implicit claim that charity or compassion translates into a particular style of activist government involving massive spending increases and entitlement expansion – was its undoing. Common sense and the Scriptures show that true giving and compassion require sacrifice by the giver. This is why Jesus told the rich young ruler to sell his possessions, not his neighbor’s possessions. Spending other people’s money is not compassionate.
Regaining our brand as the party of fiscal discipline will require us to rejoin Americans in the real world of budget choices and priorities, and to leave behind the fantasyland of borrowing without limits.

ADDENDUM: Alex Castellanos makes a case for a more “natural” or “organic” government that conservatives can live with.