House Republicans conceded Wednesday that their party suffered an embarrassing setback when Democrat Bill Owens defeated Conservative Party candidate Doug Hoffman in Tuesday’s special election to succeed former Rep. John McHugh (R) in New York’s 23rd district.The high-profile race had been marred by internal GOP divisions despite the upstate district being a Republican stronghold. Owens had the backing of Dede Scozzafava (R), the moderate originally chosen as the party nominee who dropped out over the weekend and endorsed Owens, showcasing a major ideological rift within GOP ranks. “Out of 435 races, you’ll have a classic wipe-out. And this is one of them,— Rep. Mark Kirk (R-Ill.) said. “Just about everything in New York that could go wrong did go wrong,— Rep. Jeb Hensarling (R-Texas) said.“It’s what the president would call ‘a teachable moment,’— Rep. Steven LaTourette (R-Ohio) said.In a thinly veiled reference to former Alaska Gov. and GOP vice presidential candidate Sarah Palin’s role in backing Hoffman, LaTourette speculated on why Republicans lost: “The fact that people who have no connection to New York and apparently who want to be president of the United States came in and big-footed the race is why we have a Democrat for the first time in the history of the district,— he said.Like other House Republicans, LaTourette said he expected his party to take back the seat in the November 2010 midterm elections. But he warned that his party stands to lose more seats unless it gets behind more moderate candidates in regions such as New England.“This is a center-right country,— LaTourette added. “For a Republican to be elected in New York or Vermont, they can’t be a ‘gods, guns and gays’ guy from Texas.—Rep. Candice Miller (Mich.), who identifies as a moderate-to-conservative Republican, said there is “enormous amounts of room for moderates— in the GOP, despite there being concerns among some that conservatives are edging out centrist candidates.“I certainly feel comfortable here,— she said.Rep. Chris Lee, one of two remaining New York House Republicans, urged party leaders to keep in mind that the majority of Americans are moderate.GOP candidates must convince those voters to “lean toward the more fiscally minded Republicans,— Lee added. “And my Democratic colleagues are teeing it up for us for a nice election next year.—