"The Republican party is again going to emerge as the party of new ideas," said Steele, the Chair of the Republican National Committee, at a gathering of RNC officials in Maryland. "The two-party system is making a comeback, and the comeback comes today."
The embattled chairman said it is time for the Republican party to take President Obama on directly. He called Mr. Obama's first 100 days in office a "reign of error*... all designed for short-term political pay-off, with potentially catastrophic long-term effects on our nation's economic prosperity."
For that reason, he said, America needs a strong Republican party now more than ever.
"We would be abandoning our responsibility if we were to be silent while (Democrats) spend our country into the abyss, while they borrow money we don't have, and while they usher in the most massive expansion of federal government control in the history of our Republic," Steele said.
He argued Republican ideals are thriving across America and are being delivered to Washington "in a tea bag," in reference to the "tea bagging" protests that have come to represent conservative grievances over big government. Steele also presented his message of optimism for the party in an op-ed in the Politico on Monday.
Steele's forward-looking speech came just one day after a new Gallup poll showed that, in nearly every major demographic subgroup, fewer Americans identify with the Republican party than previously. Steele himself has come under fire from Republicans who have criticized his leadership and may choose to limit his power over party finances.
Steele harkened back to his own political beginnings as a Republican from the liberal Prince George's County in Maryland to prove he could help the party regain its relevance.
"I know a little something about winning against the odds," he said.
CBS News Political Director Steve Chaggaris said Steele's speech represented his efforts to overcome the party's recent setbacks.
"Steele is attempting to hit the 'reset' button on his chairmanship with this speech, trying to inspire confidence among committee members and also trying to offer a way forward for his party," Chaggaris said. "A way forward is something that his party sorely needs after its drubbing in last year's elections and its disorienting beginning to 2009."
Steele said his party could not be afraid to stand up to the policies of a popular president.
"The president is personally popular," he said. "He's a great orator. His campaign style is wonderful. He's young, he's cool, he's hip, he's got a good looking family -- what's not to like? There's only one problem. He's taking us in the wrong direction and bankrupting our country."
"This popular politician is spending America into debt of such mammoth proportions that none of us can even begin to calculate it or really understand it," he continued.
Saying that the future of the country is at stake, Steele argued that the Republican party must stand up for the ideals of "personal freedom, liberty and the desire of self governing."
"As conservatives we must stop acting like we really don't believe in our principles and start acting on those principles," he said.
As Chaggaris notes, however, Steele neglected to address the growing rift between moderates and conservatives within his party.
"Following the departure of moderate Sen. Arlen Specter last month and, now, moderate Jon Huntsman's leaving the Utah governorship to become Mr. Obama's ambassador to China," he said, "the question remains whether the party will broaden its base moving forward or become a party strictly focused on its core conservative beliefs."
However the party re-emerges, Steele indicated it should not leave its fate in the hands of Democrats.
"Our renaissance has begun," he said. "Our opportunities lie before us, and our cause is as true today as when we first began in 1854."
*CORRECTION: This post initially stated that Steele discussed President Obama's "reign of terror." It has been corrected to reflect his actual phrase, "reign of error."