It then became co-opted by Republicans and enough right-wing extremists to drive away most moderates and all right-leaning Democrats.
Or more to the point: It became co-opted and taken over partially by Karl Rove and his cronies and then successfully painted by establishment Republicans and their Democratic peers as an extremist movement. All this because entrenched Republicans and Democrats neither want to be disrupted from their position of power or ousted by outsiders. Government by and for the government.
While third parties have historically done poorly in US elections, given how little functional difference there is between the two ruling parties, we're sorely in need of change.
Although my voter registration says "Republican," I have increasingly less and less respect for most "Republicans," including Karl Rove, Ann Coulter, many of the establishment incumbents, and dozens of others who happen to be as big (or bigger) spenders as their DNC compatriots they rail against. It's like someone else said earlier in the thread: It's not that either party is opposed to regulation, they just can't agree on what needs regulating.