Stick to First Principles -- values is a red herring.
People are concerned with their individual economic circumstance. The question Republicans need to answer for voters is "Will your economic circumstance be better if government grows larger or is made smaller." Conservative Republicans can answer that question in a heartbeat; articulate conservatives can explain why.
A moderate Republican, presumably, would try for a compromise answer. But where is the compromise? Either government grows or it doesn't. Moderate Republicans try to position themselves, as far as I can tell, as a reasonable alternative to liberals, which means government grows slowly, liberal lite. That's a loser, and it explains the party's problems.