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IMO, the only thing worse than a two-party system is one with multiple parties and, more often than not, a coalition government where the plurality party alligns with the "lesser of evil" other parties.....not an effective way to govern.
The biggest problem with our current system is the influence of money. One only need to look at the Abramoff scandal. The solution is simple -- public financing of national elections. We spend $billions to "promote democracy" around the world, yet are unwilling to ensure a better democracy at home by taking the money out of politics and enabling members of Congress to focus on policy and legislation rather than continuous fundraising.
As to the Democrats being without ideas, time will tell. I recall that the Republican "Contract with America" was presented to the public only six weeks before the 2004 mid-term elections, which they went on to win. No reason for the Dems to blow their wad too soon, only to have the right wing blogs nitpick it to death for the next nine months.
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