Nearly three decades of Republican dominance may be coming to an end.

The Republican-led defeat of President Bush’s Wall Street bailout plan caused an immediate financial catastrophe: The stock market fell an unprecedented 777.68 points, wiping out, by one estimate, $1.2 trillion in wealth. But the greater and more lasting damage may be to the Republican Party itself.

Percentagewise, the Sept. 29 crash was one-third the size of Black Monday, the stock-market crash of Oct. 19, 1987. As I write, the Dow Jones Industrial Average has risen more than halfway back up (though stock prices remain volatile). It’s still possible to believe that the economy will return to normal in a year or two. For Republicans, though, the events of Sept. 29 could well be remembered as the start of a decades-long exile from power—much as Democrats remember Nov. 4, 1980.

That’s not to say that John McCain is certain to lose this year’s election to Barack Obama. As I’ve noted before, this race has experienced so many abrupt reversals that we’re all starting to suffer from “game-changer” fatigue. At the moment, though, things seem to be going the Democrats’ way, with Obama up five or six points in national polls and swing states like Pennsylvania, Michigan, and Missouri trending toward him. Meanwhile, the GOP has virtually no hope of retaking Congress; indeed, it’s projected to lose seats in both the House and the Senate. Even if McCain wins, his past record of unpredictability combined with the likely imperative of working with a Democratic Congress suggest he’ll spend much of his time fighting with members of his own party. That would seem especially likely given the current banking crisis, which has forced the Bush administration, the House and Senate leadership of both parties, and McCain himself to practice lemon socialism.

The central con of the political coalition assembled by Ronald Reagan and maintained by his successors was that government was a common enemy. Middle-class social conservatives loathed the government for legalizing abortion, forbidding prayer in schools, and coddling minorities through welfare and affirmative action. Upper-class libertarian conservatives loathed the government for soaking the rich through the income tax and weakening businesses through burdensome regulation. The only useful function of the federal government was to provide for the common defense. This was a con for two reasons. First, the middle and upper classes were both dependent on the federal government for a variety of benefits, including Social Security, trade protection, scientific research, and assorted localized spending (termed “pork barrel” by those who don’t receive it and “economic development” by those who do). Second, the distribution of this government largesse greatly favored the rich. In the April 1992 Atlantic, Neil Howe and Philip Longman, citing unpublished data from the Congressional Budget Office, reported that U.S. households with incomes above $100,000 received, on average, slightly more in federal cash and in-kind benefits ($5,690) than households with incomes below $10,000 ($5,560). This was four years before the Clinton administration eliminated Aid to Families With Dependent Children, the principal income-support program for the poor. When tax breaks were added to the tally, households with incomes above $100,000 received considerably more ($9,280) than households with incomes below $10,000 ($5,690). Clinton subsequently expanded tax subsidies to the poor through the Earned Income Tax Credit, but not enough to undo this disparity. “[I]f the federal government wanted to flatten the nation’s income distribution,” Howe and Longman concluded, “it would do better to mail all its checks to random addresses.”

The Reagan coalition survived because nobody wanted to believe this and because both upper and middle classes were bought off with President George W. Bush’s tax cuts. (That the tax cuts favored the wealthy didn’t seem to matter.) But the proposed $700 billion bank bailout made it hard for Republicans to cling to their cherished illusion that government exists only to indulge spendthrift widows and orphans. Moreover, the $700 billion was needed to save the very beau idéal of conservatism, the free market. It was needed so badly that (after a few alterations to protect the taxpayers’ investment) liberal House Democrats like Barney Frank made common cause with conservative House Republicans like John Boehner to urge its passage. To a Republican Party that had come to believe its own propaganda, this simply didn’t compute. So, House Republicans voted against their standard-bearer’s own bailout by a margin of 2 to 1, a dose of free-market principles that sent the Dow into the crapper.

It should be remembered that a fundamentalist belief in untrammeled capitalism is not the first but, rather, the second pillar of Reagan-style Republicanism to fall. The first was the belief that the United States should extend military power wherever enemies lurk, regardless of what our allies do. Reagan didn’t actually practice this doctrine, except to overthrow a teensy regime in Grenada and to deploy (and, after a deadly terrorist bombing, withdraw) U.S. Marines in Lebanon; he preferred to level stern rhetoric against the Soviets (“Evil Empire”) while subsidizing proxy wars abroad, not always in accordance with the law. That the Soviet Union started to disintegrate on Reagan’s watch is mistaken by many for proof that it’s possible to defeat a powerful enemy by calling it names and spending a lot of money on (but never actually using) military weapons. President Bush, alas, took Reagan at his saber-rattling word, waging a war against Saddam Hussein so unilateral that, except for a few Kurds, there was no indigenous fighting force to prop up the way we propped up the ARVN in South Vietnam. The result was and remains, even after violence in Iraq has been greatly reduced, a lingering feeling even among Republicans that the Iraq war was at best a distraction from the more necessary fight against al-Qaida and the Taliban.

This is not, I’ll confess, the first time I’ve believed that the Republican ascendancy has ended. In 1994, I felt sure that the warmed-over Reaganite nostrums of Newt Gingrich’s “Contract With America” spelled defeat in the midterm elections. Instead, the Republicans gained control of both houses of Congress for the first time in four decades. I also thought the GOP was cracking up in 2000, when, desperate to find fault with every last aspect of the Clinton administration, it started bad-mouthing prosperity. I got that wrong, too. So maybe the GOP isn’t really dead.

It sure looks dead, though.