Not since Watergate has the electoral landscape appeared as favorable for Democrats as it does today. All polls show gale-force discontent with the country's direction under President Bush (he recently received the second highest disapproval rating Gallup has ever recorded in seven decades of measuring attitudes about presidential performance). From the 2008 presidential candidates to the party campaign committees, Democrats are consistently outraising Republicans. Even the electoral calendar is cooperating: Democrats next year must defend only 12 Senate seats compared to 22 for Republicans, including seven in blue or Democrat-trending states where disillusionment with Bush and the Iraq War is most intense. Not all trends, though, are as positive for the party. Many Democratic strategists understandably remain uneasy about Congress' sinking approval ratings and the mixed performances by the leading 2008 Democratic presidential hopefuls in head-to-head polls against the top Republican candidates. But overall, it seems more relevant than it has in many years to ask how Democrats would govern if provided unified control of Congress and the White House.

Into that breach steps Matt Bai, a talented writer and reporter for The New York Times Magazine with an entertaining account of the Democratic Party's search for direction in the Bush years. Bai has produced a political history at the ground level, if the ground level is defined to include the penthouse. He believes the most important contemporary development in the Democratic Party is the emergence of a diffuse movement—ranging from rich coastal liberals to the dispersed activists who find community on liberal Web sites such as the Daily Kos—united in the belief that the party since the early 1990s has faltered before the challenge of an ascendant conservatism. In The Argument, he takes readers on a tour through this political uprising, traveling from East Coast to West to spend time with key figures such as Rob Stein, a restless former Clinton administration aide who organized wealthy Democrats to fund a liberal alternative to the conservative political "infrastructure" constructed since the 1970s; Markos Moulitsas Zúniga and Jerome Armstrong, pioneers of liberal Internet activism; Howard Dean, the insurgent presidential candidate turned renegade party chairman; Andy Stern, the thoughtful Service Employees International Union president laboring to modernize not only liberalism but organized labor; and Ned Lamont, the wealthy antiwar businessman who, shooting star–like, beat Joe Lieberman for the Democratic Senate nomination in Connecticut last year, but then lost the general election to him.

This approach yields many insights and some wonderfully told tales. The diversity, passion, and distance from conventional power of Bai's cast allows him to illuminate the challenges facing Democrats from some fresh angles. But that strength is also the book's weakness: Ultimately most of the characters Bai chooses are too peripheral to tell the story he tries to load onto their backs. The Argument, like a plane endlessly circling the runway, approaches but never quite reaches the toughest choices that the Democrats confront.

Still, Bai is an excellent writer and reporter with a deft touch for revealing character and a reliable gift for crafting memorable phrases. Howard Dean's "scream" speech after the Iowa caucus in 2004, he writes, was "like a man trying his damnedest to give an upbeat toast at his ex-wife's wedding." Bai admiringly describes one grassroots activist as "the kind of woman who would think nothing of climbing a chain-link fence in heels." He has an easy way with a story, too, which he displays to great effect through long set pieces like a car ride from Los Angeles to San Francisco with Armstrong and Moulitsas, and a gripping confrontation between an enraged Bill Clinton and a wealthy liberal at a private conference of big Democratic donors that Bai industriously wormed his way into.

Bai also offers three-dimensional profiles of his subjects. He clearly likes almost everyone he writes about and finds them idealistic, thoughtful, and fun. But he's hardly blind to their flaws; the reader leaves the book with the sense that by the time Bai finished he didn't admire many of them quite as much as he expected to. His portrait of Moulitsas, the brash founder of the eponymous Daily Kos, is especially edgy; Bai appears to see him as more operator than idealist. He pauses the book's On the Road section with Armstrong and Moulitsas to make sure we're aware that Moulitsas doesn't recognize the name of Pat Caddell, the enfant terrible strategist who helped shape the presidential campaigns of Jimmy Carter in 1976 and Gary Hart in 1984 and also lingers on the fact that Moulitsas hasn't read two books directly related to subjects on which he opines with great passion. It's the authorial equivalent of a raised eyebrow.

Bai gets plenty of the big things right, too. He's correct to argue that the diverse liberal movements that blossomed in opposition to Bush have invigorated the left wing of the Democratic Party more than anything since the antiwar, civil-rights, environmental, and feminist movements of the 1960s and early 1970s. "More than at any time since the 1960s," he writes, "the party and its leading politicians were being forced to respond and adapt to a popular movement beyond their control." And he's equally correct to argue that although this movement leans left, its motivation is more partisan than ideological. "To the extent that a single philosophy united all of [these] people," he writes, "it wasn't any kind of governing agenda for the country. Rather, the netroots stood chiefly for the principle of unyielding partisanship … According to the blogger ethos, Republicans, whether staunchly conservative or not, were to be stomped, beaten, and generally humiliated. And any Democrat who didn't pursue that goal … needed to be taught a lesson."

Bai shares this movement's disdain for the Washington Democratic establishment (which he sees as timid and cautious), and he generally views both the activists in the suburban tract homes and the rich donors in the houses on the hill as rejuvenating influences in a party desperately in need of them. Yet, characteristically, Bai is also keenly aware of the movement's limitations, such as a studied, even defiant, aversion to history. To most bloggers, he writes, anything that had occurred before Bill Clinton's impeachment in 1998 "felt as ancient … as the underlying causes of the Peloponnesian War, and about as useful." He doesn't blink at the pettiness and arrogance displayed by many of the Democracy Alliance's benevolent plutocrats. And he wearies of the movement's elevation of tactics over substance, and its demand for unrelenting, unconditional political warfare, writing sympathetically about Barack Obama's amazement after he generated a ferocious backlash from Kos readers with a plea for more tolerance of diverse views within the Democratic coalition and greater outreach to those voters and interests outside of it.

In all these ways The Argument has much to teach anyone interested in the modern Democratic Party. Yet overall the book is less illuminating than it might have been. Part of the problem is that several of Bai's subjects fizzle out. Any author who tries to tell a contemporary story by following individual characters is in a situation similar to a wildcatter drilling for oil. Bai, alas, hits a few dry holes: The Democracy Alliance mostly spins its wheels; Lamont loses; Jerome Armstrong's 2008 presidential candidate (former Virginia Governor Mark Warner) doesn't run. These characters' experiences today don't seem as central to the Democrats' future as Bai probably expected when he chose them. For all of the book's considerable virtues, trying to understand the modern Democratic Party through The Argument is a bit like trying to understand Hamlet through Rosencrantz and Guildenstern Are Dead.

The larger problem is that Bai never establishes a clear, or even consistent, perspective on the debates over the party's direction. On the one hand, Bai eloquently argues that after the 1960s too many Democrats worshiped "a batch of statutes"—programs such as welfare or affirmative action—that they refused to rethink despite evidence that they alienated voters and achieved, at best, only equivocal results. He persuasively compares the Democratic Party of that era to General Motors, unable to adapt to a new generation that simply was no longer attracted to its products. The most consistent note in the book is Bai's yearning for Democrats to boldly rethink their agenda and produce "transformative solutions" that respond to the challenges of the Information Age as the Progressives and New Dealers responded to the demands of America's industrial revolution. In all these arguments, Bai sounds like nothing so much as Bill Clinton and the "New Democrats" of the 1990s who insisted that the party needed new means to advance its traditional priority of expanding opportunity.

But simultaneously, and much too casually, Bai accepts the bloggers' cartoon version of Clinton's presidency. Although he doesn't fully identify with the sentiment himself, Bai sympathetically quotes liberal critics who argue that Clinton "had stripped the party of its moral authority, and … brought the country itself to the edge of ruin." If so, ruin had relocated to some pretty tony neighborhoods. During Clinton's eight years, the country experienced the largest decline in poverty since the 1960s, a 15 percent increase in the median income (with African Americans and Hispanics recording much bigger gains than whites), massive job creation, and the first federal surpluses in three decades, not to mention improving social indicators such as declining crime rates. Bai doesn't grapple with any of that. Nor does he assess, in anything more than a fleeting reference, Clinton's efforts to rethink traditional liberalism—exactly what Bai urges the Democratic Party to do today. Clinton's signature ideas—balancing opportunity with responsibility and government activism with fiscal discipline; rewarding work; coupling support for free trade with expanded education and training—aren't all still relevant for a Democratic Party hardened by two terms of brutal combat with Bush and congressional Republicans. But Bai makes little effort to think about what in that legacy should be saved, and what discarded. By failing to do so, he commits the sin for which he correctly chides the netroots: slighting history.

Bai's plea for a more ambitious, transformative Democratic agenda, also seems disconnected in another key respect. Visionary ideas detached from a strategy to move them into law are like balloons without strings. (As John F. Kennedy once put it when an aide urged him to promote a policy he knew he could not pass through Congress, "That's vanity … not politics.") But Bai never decides whether he believes the new liberal movement is correct that Democrats can achieve sustained power and impose a sweeping agenda through a deliberately polarizing politics primarily aimed at motivating their base, or whether they must find ideas that can attract broad support across party lines, even if that means some conflict with the party base. Through his criticism of Clinton, Bai seems dubious of the latter strategy, but he also recognizes the limitations of the former. As he should: Bush's disastrous second term has demonstrated that not only the country but a political party itself loses when it aims its agenda almost solely at its core supporters. But Bai's characters don't fully think through this basic choice, and he doesn't rise above them enough to do so, either.

Yet outside the scope of Bai's book, in the early stages of the 2008 presidential race, that rethinking does seem to be occurring and heading toward a strikingly pragmatic resolution. John Edwards, reviving some of Dean's 2004 arguments, has denounced Clintonesque triangulation and insisted the party cannot win without bold liberal proposals. But after seven years of battle with Bush, none of the other candidates—or for that matter, most early state Democratic voters—seem to have much stomach for a full-fledged ideological showdown. Instead, Obama, Hillary Clinton, and most of the remaining contenders are constructing agendas that echo Bill Clinton through themes of personal responsibility and fiscal discipline, but also reflect the Democrats' expanding sense of opportunity with proposals on health care, energy, and education more liberal than those Clinton advanced after his first term. Compared to the Clinton years, in other words, the candidates are tilting left, but not as far left as Bush tilted to the right. More reliant on the votes of moderate voters, Democrats are necessarily less attentive than Republicans to the demands of their ideological base.

The conflicts between that ardent base and more consensus-oriented Democrats—The Argument that inspires so much passion among Bai's subjects—inevitably would resurface if the party wins the White House next year. (If either Obama or Hillary Clinton is elected, their shared instinct to seek consensus could inspire many of the same complaints heard in the book about Bill Clinton.) But for now, the fight among the 2008 Democrats is less about where the party should go than about who best can take it there. Bai might have captured more of that somewhat surprising dynamic if he had included among his characters some insiders—congressional leaders or a presidential candidate—actually weighing these considerations as they set their course.

It would be a mistake to dwell too long on these limitations of The Argument, because the strengths of its reporting and writing greatly outweigh them. Bai's coverage of the 2004 presidential campaign was fresh and distinct. This book underscores his emergence as an important new voice in the political dialogue, with keen insights and an engaging way of expressing them. As a writer, he's always fun to spend time with. And if he didn't really answer the most difficult questions facing the Democratic Party, well, he has plenty of company in that. He's sure to get a few more chances, because, while it may be in abeyance now, The Argument isn't ending any time soon.

The Argument: Billionaires, Bloggers, and the Battle to Remake Democratic Politics by Matt Bai (The Penguin Press, 316 pages, $25.95)