FORTUNE — Over the past four years income inequality has worsened, particularly among minority groups. Continuing a long-term trend, the gap between rich and poor is the widest it has been in 40 years. Wealth inequality is even more skewed, with the upper classes enjoying increases in the prices of stocks and bonds, courtesy of the Fed’s quantitative easing, while housing — the main source of wealth for middle- and lower-income families — has been slower to recover. Credit availability is similarly lopsided, swinging from one extreme to the other: It is virtually impossible for those in minority neighborhoods to get a home loan these days.
Under Obama the lower classes have fallen behind, yet Romney garnered only 27% of the Latino vote and 7% of the African-American. His support among those making less than $50,000 a year was a paltry 38%. Apparently, these constituencies feared they would do even worse under Romney. No doubt his gaffe about writing off 47% of the electorate didn’t help. But it was more about the GOP’s take-no-prisoners, antigovernment message.
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The Republicans — and I’m one — lost an opportunity to redefine themselves as the party of effective government. The Reagan/Thatcher vision of limited but competent government regressed to the notion that any government is bad except when it comes to defense spending or regulating social conduct. But Reagan always recognized a role for government in protecting society’s most vulnerable.
The GOP’s inability to see beyond its antigovernment dogma blinded it to the biggest failure of the Obama administration’s economic policies. Indeed, the damage done to those on the lowest rungs of America’s economic ladder was hardly discussed during the campaign. The President wanted to help America’s disadvantaged, yet his economic team pursued policies that, while stabilizing the banking system, created wealth primarily for those who own financial assets. To be sure, the Obama administration has tried to make the structural changes our economy needs, but those efforts have been incremental and poorly executed. Witness ineffective programs it has launched for job retraining and foreclosure prevention. They were designed with good hearts but lacked hard-headed planning and execution.
Even after its electoral thumping, the GOP continues to sound like the Christmas Grinch, hammering away at entitlement spending while rubbing its hands together over protecting the rich from higher taxes. The U.S. must put its fiscal house in order, but that shouldn’t preclude cost-effective programs to help those in need. The GOP should help retrain our workforce, restructure our distressed mortgages, rebuild our public education system, and repair our infrastructure. But in return it should demand hard metrics for success and accountability if the programs don’t meet their goals. Some programs will cost new money. Others can be financed by redirecting funds from inefficient programs. But much like a corporation with a broken business model, we must make investments now to ensure our future competitiveness.
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Let’s marry the President’s desire to help the less fortunate with the green-eyeshade discipline of the Grand Old Party. Yes, let’s help this President succeed. But that in turn will mean more lower- and middle-income households climbing the economic ladder into traditional Republican territory and more minorities viewing the GOP as supporters of opportunity and inclusiveness, not as miserly defenders of the rich.
As the popular culture rediscovers Lincoln with the release of a new blockbuster movie, Republicans, too, should reacquaint themselves with the father of our party. Lincoln understood that a stable democracy and a healthy economy rely on everyone having an equal opportunity to participate. Let’s return to those noble roots.
This story is from the December 24, 2012 issue of Fortune.
