The President was already floundering in deep water, so the latest economic news may feel like another huge stone has been tied to his ankle. In the final quarter of 2005 the national economy abruptly capsized. The gross domestic product grew by only 1.1 percent, down from 4.1 percent during the previous three months. George W. Bush’s happy talk about a “strong economy” has been exposed as fraudulent. For nervous Republicans, the portents for the 2006 elections are ugly.

This sudden swoon may represent the long-feared moment when debt-soaked consumers finally tap out, no longer able to borrow or buy enough to keep the economy going. If so, that development is truly ominous, especially for millions of struggling families. We can’t know for several months. Stock-market cheerleaders dismiss the slowdown as a quirk and predict the economy will bounce right back. Other forecasters are not so sanguine. At a minimum they expect slower growth to linger during the next six months–when voters are making up their minds.

Everything, it seems, is declining except for household debt and the trade deficit. The convergence of bad indicators suggests that Bush’s right-wing economic agenda may finally have come back to bite him. Four years ago he defended his tax cuts as much-needed stimulus for the economy–never mind that the money went overwhelmingly to the top wealth holders and businesses.

Bush’s bastardized version of Keynesian stimulus–reward the affluent, forget the toilers down below–did work for a time. At least his swelling budget deficits led to a halting, lopsided recovery.

It turns out that the rich cannot sustain things all by themselves, not when working people are losing ground–incomes stagnant or falling, family indebtedness reaching scary new heights. American households experienced negative savings last year–they spent $42 billion more than they earned–for the first time since 1933, the depths of the Great Depression. The Federal Reserve added injury when it decided to raise interest rates, intending to lance the housing bubble. Housing inflation was the only thing propping up ordinary consumers as wages stagnated. So people borrowed–imprudently, in many cases–against their homes and spent the money on everyday consumption. That game is now ending or already over. Orthodox economists assumed business investment would replace consumer spending as the workhorse driving economic growth. But business investment declined sharply too. Why invest profits in developing new production when consumers are running out of gas?

For Democrats, the predicament is a serious opportunity, if they will stop obsessing over Bush’s deficits and begin thinking again like economic liberals (not likely, I grant). Reducing the deficit at this point will insure a nasty recession, especially if the Fed doesn’t quickly reverse itself and start cutting interest rates. Democrats should instead promise to engineer a grand swap: If restored to majority power, they will repeal Bush’s reactionary tax cuts and devote the billions to immediate pump-priming–public-works employment and tax relief for struggling families. A Louisiana recovery corporation would be one place to start. Quick tax cuts for the middle and bottom brackets would help too. That shift won’t solve deeper problems like deindustrialization and the trade deficit, but it might keep the country out of the ditch and provide breathing space to confront other weaknesses.

Of course, neither Bush nor his cadres would touch such a proposition. Why should they? Right now, they are working over a handful of wobbly Democratic senators to get the votes needed to renew those wrongheaded tax cuts. But Democrats have a splendid opening to be substantive and political and righteous for working folks, all at once. Let the Bushies play their terror siren. Let Democrats talk about the wolf that is much closer to people’s door. The appropriate agenda for this season is creating jobs, restoring incomes and rescuing indebted families. A long, long time ago, that was how Democrats won elections.