Sean Trende has a terrific analysis of what the 2010 election might be like for Democrats.

President Obama's policy choices to date are wreaking havoc on the brand that Democrats cultivated carefully over the past twenty years. Bill Clinton worked long and hard to make it so that voters could say "fiscal conservative" and "Democrat" in the same sentence, but voters are finding it difficult to say that again.
If brand damage is truly seeping over into Congressional races - and the polling suggests it is - then the Democrats are in very, very deep trouble this election. There is a very real risk that they could be left with nothing more than Obama's base among young, liberal, and minority voters, which is packed into relatively few Congressional districts. It would be the Dukakis map transformed onto the Congressional level, minus the support in Appalachia. That would surely result in the Democratic caucus suffering huge losses, and in turn produce historic gains for the GOP this November.