As the election drama renewed optimism among voters disgusted with the Bush era, there was an unfortunate side effect: the war in Iraq seemed to disappear from the headlines. Perhaps it was public exhaustion over a war that is nearing the end of its fifth year, or the unwillingness of Democratic leaders and candidates to keep pressing their call for an end to the occupation. Perhaps it was the White House’s orchestrated “Petraeus moment” in September and the temporary decline in violence in Iraq that led politicians and media to put the war on the back burner. Meanwhile, Democrats were slow to confront another conflagration–the tottering economy. We now face the prospect of an election-year recession on top of a disastrous and costly war.

Some voters feel that one or the other crisis demands the higher priority: the war or the rapidly deteriorating economy. We believe both are top priorities. These twin disasters are linked in practical necessity and as a stark expression of America’s weakened condition. One reason Washington is so ill equipped to deal aggressively with recession is that it has spent so lavishly on a war that should never have been fought in the first place. How does government turn around a shrinking economy when it already blew its wad on Iraq? Indeed, the linkage poses discomforting questions for Democrats as well as Republicans.

Two years ago Nobel Prize-winning economist Joseph Stiglitz estimated that the war may ultimately consume $2 trillion–now much closer to standard projections than the $200 billion estimate the Bush crowd originally scoffed at. Last year the Democratic Congress took up the fight to end the war, but most Democrats, fearing the accusation that they would be “abandoning the troops,” shied away from using their power to curb or cut off war spending. This is a shame, since the war continues to drain desperately needed resources. The projected cost of the war for fiscal year 2008 is $156 billion, which, according to the National Priorities Project, is enough to provide healthcare for 44 million Americans (only slightly less than the total number without healthcare); or to build 1.2 million new housing units; or to provide 161 million homes with renewable energy.

If this war drifts out of sharp focus, there will be dire consequences for the next President. The Defense Secretary and the Chairman of the Joint Chiefs of Staff are beating the drum for fat military budgets, even as Iraq’s defense minister announced that he expects US troops to play guardian and instructor for Iraqi forces through 2018. Although all the Democratic candidates now reject long-term occupation and have called for withdrawal, among the leading contenders, Barack Obama and Hillary Clinton are unwilling to suggest even modest cuts to our out-of-control military budget. In fact, both call for increasing the size of the military by some 90,000 troops, which would actually increase the budget. John Edwards opposes a troop increase and has called for cutting “wasteful” spending on such programs as missile defense, but he has not called for overall reductions in the military budget.

The economic crisis has so far been approached hesitantly and without the boldness it demands. The stimulus proposals offered by leading Democrats hover around $100 billion. This is too little. Some authorities in academia and on Wall Street warn that it will take $300 billion to $400 billion in emergency spending to alleviate severe suffering and generate real recovery. Losses from Wall Street’s folly are likely to total $900 billion, warns the Levy Economics Institute, a respected think tank. That’s an Iraq-class disaster.

This is one of those rare moments when a political party’s character is tested. This time the gut check is on two fronts. The “progress” from the surge in Iraq is a manufactured illusion. Our military and diplomatic leaders are conceding failure to achieve the reforms the surge was supposed to make possible. When even top US officials argue for “Iraqi solutions to Iraqi problems,” we know the illusions in high places are dying. Democrats–especially the presidential candidates–should continue to lay out their case against the surge’s “success” and argue this to the voters. (Some Bush Administration officials and their necon cheering section have applauded the new Iraqi de-Baathification law as a crucial step forward and a vindication of the surge strategy. But both Shiites and Sunnis familiar with the law say it could be even more restrictive than the old one, and thus stoke further sectarian tensions.)

Washington can help most by not only ending the occupation of Iraq but by accelerating diplomatic negotiations and involving all regional players in working toward a solution there, as well as by increasing aid to the millions of war refugees.

As the economy deteriorates, Democrats have a golden opportunity, since the Republicans–still obsessed with making permanent their tax cuts for the wealthy–are not offering anything close to what’s needed. Leading Congressional Democrats as well as the presidential contenders must demonstrate convincingly how government can be a powerful instrument for the common good. If the twin disasters deepen, they will not be insulated from blame by making halfhearted deals with George W. Bush.