Since at least 1980, the success of the national Republican Party have depended on assembling and holding together a coalition of fiscal and social conservatives. Beginning in 1980, Ronald Reagan had extraordinary success with this coalition. His biggest success was drawing into the Republican orbit fiscally liberal but socially conservative voters who had historically voted for Democratic Presidents.
When Reagan left the political scene in 1989, this coalition began to come apart. In 2000, George Bush II put the coalition together again. Eight years later though the fiscal & social conservative coalition was in shambles, the worst shape it had been since Reagan.
Since then the always simmering feud between fiscal conservatives and social conservatives in the Republican Party has boiled over. Fiscally conservative Republicans have been most aggressive in pointing to the GOP's flirtation with social issues as the reason for the Republicans' demise. These Republicans typically point to Sen. Barry Goldwater as the ideal Republican - fiscally conservative and a moderate (if not liberal) on social issues. Those Republicans tend to forget Goldwater's version of Republicanism, sans social issues, was slaughtered in the 1964 presidential election, while the Reagan coalition of fiscally and social conservatiives won two landslides in 1980 and 1984.
Quite simply, Republican fiscal conservatives are wrong. Social conservatives haven't cost Republicans their majority in Congress and the White House. Rather the Republicans lost because the GOP gave up being the party of fiscal conservatism. The public does not believe the Republican Party is the part of lower taxes, smaller government and balanced budgets. And for good reason. The legacy of the last Republican Congress and President Bush is that they ceded the fiscal conservative philosophy to the Democrats.
Governor Daniels is exactly right that the Republicans need to get back to being the party of fiscal conservatism. While I doubt he was suggesting the GOP abandon its socially conservative agenda in doing so, that nonetheless is the inevitable spin his comments have received.
The national Republican Party wins when it can assemble and hold together a coalition of fiscally conservative and social conservative voters. The members of the coalition don't always get along, but without each other the GOP cannot win Congress or the White House. It's as simple as that.