It’s important to start with the obvious: Yesterday marked the end of the hyper-activist phase of the Obama administration, and that’s no small matter. Republicans picked up an astounding 60+ seats in the House and now enjoy their largest working majority in decades. Moreover, the House will be quite conservative, with scores of new members elected on an explicit promise to limit the size and reach of the federal government. Come January, don’t look for the new House to go along with any of the ambitious and expensive federal programs, tax increases, and burdensome regulatory requirements that have marked the first two years of the Obama era.

Republicans also made impressive gains in the Senate, making it even less likely that any type of legislation will get enacted without at least some Senate Republican support. And with 24 Democratic senators up for reelection in 2012 — many of them in states much less friendly than the ones in which their colleagues competed this year — there will be opportunities for Republican senators to effectively control the fate of legislation if they are smart about building bipartisan coalitions.

Still, Republicans must understand that they are still the opposition party, without the ability to effectively govern the country. That has important implications.

For starters, it means that the health care war is really only just beginning. By all means, the House should press for full repeal. But it has always been the case that the decisive health care election was always going to be in 2012, at the presidential level. The only way the fight for repeal-and-replace can be won decisively is if a Republican presidential candidate runs on an explicit replacement platform, and wins. Then there will be a clear mandate to overturn Obamacare and move the nation’s health-care system toward consumer control and market competition. Republicans in the House and Senate should recognize this, and lay the foundation for the ultimate victory by highlighting the most unpopular and damaging aspects of what was passed.

On budget matters, Republicans in both chambers would be wise to take the long view. The greatest challenge Republicans face is making good on their commitment to actually implement real cuts in government spending. The politics always get much, much tougher when the conversation moves from the abstract of the campaign trail to the specifics of legislative language. Republicans must understand that real progress on fiscal matters in coming years will require building a durable center-right coalition that is strong enough to take the intense heat that always comes whenever real cuts are on the table for consideration. Consequently, House and Senate Republican leaders should resist the temptation to go it alone after last night’s victories. Instead, they should reach out immediately to those remaining conservative Democrats in the House and Senate who have expressed a desire to downsize government too, and work with them to implement serious budget discipline. That was the Reagan model for his 1981 agenda, and it worked. Of course, it will require some compromises, but those compromises (on details, not principles) will be worth it if the result is a bipartisan budget framework that can be contrasted with what will surely be a far more liberal tax-and-spend agenda coming out of the White House.

[Cross-posted at NRO here.]