This NY Times article discusses the prospects for the Democrats should Kerry lose. You must be a NY Times subscriber to read the article, so here is an excerpt:

"As far as most Democrats are concerned, their side won the White House in 2000. And as far as most Democrats are concerned, given the state of the economy and the war in Iraq, they should win it again a week from Tuesday.

So it seems fair to say that should Senator John Kerry lose to President Bush - which many Democrats insist is highly unlikely - the Democratic Party would be in for another bout of recrimination, self-examination and transformation."

And one more:

"Most immediately, a large reason that Mr. Kerry captured his party's nomination is that Democratic primary voters concluded he could hold his own on national security. He is, after all, a Vietnam veteran who voted for the war on Iraq.

In this context, a Kerry loss would crystallize an excruciating question for the Democratic Party: Can it ever compete with the Republican Party on a threshold issue that seems likely to be central to American presidential elections for a long time to come?

"If we lose, we are going to have to find an answer to the question of how are we going to keep this country secure,'' said Al From, the head of the Democratic Leadership Council, a group of moderate Democrats who helped elect Bill Clinton president at a time when no one thought or talked about a domestic terrorist attack."