It's a nightmare, but will it come true?

Inauguration - Four more years of unfettered Bush may sound like a disaster for America and the worl

The first years of the Clinton administration showed that, in its present form, the American political system is incapable of serious change in a progressive direction. The next four years of George W Bush will show whether it is capable of such change in a neoliberal direction. Those of us who have no wish to see a programme of radical reaction in America might thank God that Bush spent much of his first term crippling the resources he would need to achieve it. The downside is that in the process he did immense damage to America and the world.

Abroad, the US army, bogged down in Iraq, does not have the men for any more large-scale adventures. It might be dragged into one as an unintentional result of foolish and aggressive administration policies, but if this occurred the US would almost certainly have to reintroduce conscription and a Republican defeat in 2008 would then seem assured. This new weakness is now widely if tacitly recognised by both Republicans and Democrats. The problem is that few of them are capable of drawing serious conclusions from this about the need for a new US approach to the world. Instead, real foreign-policy debate continues to be stifled by the myths of America's power, benevolence and world mission.

At home, a combination of tax cuts and military spending has produced a budget deficit that will also make radical change more difficult - unless Bush goes with the very wildest men on the libertarian right and sets about destroying altogether the non-military aspects of the American state, which seems unlikely.

It is thus possible that this Bush presidency will, in the end, be seen by history as another period of drift for the American state. But I write with crossed fingers and a bunch of garlic tied to the computer. In its capacity to exceed the worst expectations of its critics, this administration recalls the old Private Eye joke about "Harold Wilsoon": when anyone said, "Not even Harold would do a thing like that", you could be sure that he "will soon".

When describing the philosophy and intentions of the Bush camp for a second term I use the term "neoliberal" and not "conservative" deliberately. The truly conservative elements of the Republican right's agenda, in the areas of morality and culture, are likely to remain largely symbolic and will have little effect on most Americans. Large sections of the Republican elite oppose the "moral majority" agenda but are by contrast perfectly happy with cuts in taxes and social services. These include the old-money elite, some of whom still call themselves "Eisenhower Republicans" (though the general's son voted for John Kerry). They also include populists such as Arnold Schwarzenegger who have exploited to the full the appeal of Bush's macho nationalism but whose electorate often does not share the conservative religion of the heartland and the white South. And the idea of returning the US to the conservative, religious, small-town world of the 1950s runs too clearly against the capitalism-driven mass culture of the US media and the corporate interests that underlie it.

The neoliberal philosophy of an unrestrained capitalism, by contrast, has both immensely powerful business lobbies and powerful contemporary economic trends working for it, notably "globalisation". And neoliberal moves to undo much of the New Deal, cut social welfare provision, change tax structures, and reduce employment protection still further, really would affect the lives of most Americans severely for decades to come.

Apart from further attacks on organised labour, how much of this agenda can Bush realistically hope to pursue? In their own last period in office the Democrats failed dismally in their plans for comprehensive health coverage. This was partly the result of the Clintons' tactical ineptitude and the lack of any real commitment to the poor from most of the Democratic leadership. But it also reflected the inertia in the US system. In the highly fragmented and undisciplined American party political system, lobbies and interest groups can wield enormous influence. They create far greater limitations on the power of the US president than constrain a British prime minister with a strong majority. Samuel Huntington once suggested that the powers of the US presidency derived from and in some ways resembled those of the Tudor monarchy: very strong in some areas, such as making war, but very weak in others. Symbolically beheading dissident ministers and officials, as Bush is wont to do, just doesn't hack it - so to speak - when it comes to carrying out major changes in government and the domestic order.

So will Bush also be defeated by the status quo? The radical moves of the past four years are not necessarily a good guide. His first term did not produce much immediate pain for the "middle classes" (which, in US terms, means most of the white working class as well). Though the rich were grossly favoured, mainly through tax cuts, the mass of the population was not directly harmed in a way that can be presented in 30-second TV reports. But the Bush team's plans for the next term, including the combination of the partial privatisation of social security and further tax cuts, really do risk alarming a great number of ordinary Americans. Even educated Americans are often terribly ignorant about the wider world but they have a much better idea of how their pensions are paid, and of their value. Bush will not get away with outright lying to the public on this issue as he did with his claims of Iraq's links to al-Qaeda and possession of WMDs.

Social security - meaning, above all, pensions - has been called the "third rail" of American political life: if you touch it, you die. Bush has got away with talking about radical reform so far by being studiously vague about what it would mean. When his administration gets into specifics, however, many Republican senators and congressmen may start to remember that they come up for re-election in 2006 and 2008. Moreover, the Democrats in Congress, in opposing Bush's plans, will have backbone-stiffening support from powerful social-political organisations, above all those representing seniors. Under the Senate's laborious rules even a minority of 45 senators, if it is determined enough and has a few allies in the majority, can obstruct laws for a very long time.

All this helps to explain why second-term presidents tend to concentrate on foreign policy. In their first term presidents discover just how difficult radical domestic reform really is within the US system. Given America's power and prestige in the world, by contrast, foreign policy seems to present the opportunity for cheap successes (even if some turn out not to be so cheap after all).

Moreover, a second-term president has a greatly intensified problem of maintaining discipline in his own party. In the first term limited discipline is maintained by the need to get the president re-elected. Once that is achieved, the discipline disappears and the party bigwigs jostle for the succession, as several leading Republicans have already begun to do.

All in all, then, Bush seems fairly unlikely to be able to ram through social security reform in the way he rammed through the Iraq war and tax cuts. Nothing seems likely to go before Congress before 2006 at the earliest, and by then the president could be a lame duck.

Nor should we expect the successful prosecution of an aggressive foreign policy. Indeed, it is not only its commitment to neoliberalism that has made the Bush team - against the usual second-term pattern - switch to domestic policy. It is also the recognition that the parts of its foreign policy which depend on military threat are bankrupt. Apart a few would-be Napoleons, everyone in the administration knows this.

Contrary to widespread expectations, therefore, drift may be even more pronounced in foreign and security policy. Outside the Middle East, the first-term Bush administration often followed not radically new and aggressive, but old, cautious and pragmatic strategies - even, to an extent, Clintonesque ones. This has been above all true of relations with China, on which the administration performed something very close to a U-turn; before 9/11, its agenda was to increase tension with China. With Russia, too, the administration has been tough in certain areas but has certainly not sought out occasions for conflict.

It might be argued that this kind of pragmatic restraint is in fact the default mode of the US military and foreign-policy establishment, and indeed of the American people. The exception is when nationalism is stirred up and fed by deliberately manipulated paranoia, ethno-religious hysteria and national Messianism. This was true for much of the cold war in US attitudes to communism, and now it is now true of attitudes to the Muslim world.

Even in the Muslim world, however, the second-term team is not likely deliberately to launch more major wars. Extricating itself from Iraq with any dignity will occupy most of its energies for some time. The danger of a US and/or Israeli attack on Iran's nuclear sites, though still present, has also receded.

On the other hand, the administration also seems incapable of seeking detente with Iran or of adopting any kind of serious strategy for relations with the Muslim world in general. Neither US political party seems capable of even considering the merits of largely withdrawing from the Middle East and returning to the position of an "offshore balancer", exerting influence and avoiding crisis by working through regional states. Although not as aggressive as the Republicans, the Democrats are also committed to a milder version of US neo-colonialism in the region.

The sick joke of a supposed Bush administration commitment to democratise the Middle East is not even worth discussing. As for the Arab-Israeli "peace process", if Tony Blair hopes for serious pressure from the United States on Ariel Sharon, he is deluded, or at least self-deluded.

Curiously, some of the sanest and most determined opponents of the Bush approach to the Middle East and the "war on terror" are to be found today not in the Democratic leadership, but in the uniformed military and the intelligence community. Leading military figures were horrified by the conduct of the war in Iraq and the damage it has done to the army. They were infuriated by the administration's contempt for military advice and its public humiliation of those who warned about what the occupation of Iraq would involve. There have been bad as well as good reasons for this hostility. To give the devil his due, Donald Rumsfeld has killed off or greatly reduced some of the very expensive, virtually unusable weapons systems - such as the Crusader artillery system and the F/A-22 "Raptor" fighter jet - on which the top brass had set its collective heart and its hopes of future personal employment in military industries.

But whatever their reasons the military, the CIA and the FBI are now the source of some of the most damaging leaks about the Bush administration - for example, about its encouragement of torture in Iraq and at Guantanamo. The measures to crush dissent in the CIA will only encourage more leaks and any attempt at purging dissidents could rebound disastrously on an administration in which none of the senior members served in war.

While the US media was disgracefully acquiescent in the administration's lies over Iraq, the memory of Watergate has not altogether faded. US journalists are still anxious for scoops, and they have a vulpine sense of when an administration or a leading figure is bleeding politically.

So rather than the shark-like efficiency and radical reformist zeal of which Bush's team dreams, his second administration may come rather to resemble a moribund whale, rolling helplessly in the waves of events, and with a variety of domestic predators tearing bits out of its belly. In some ways, such a Republican failure would have worrying implications for the American system's capacity to embrace change - but they would be very much less worrying than the likely consequences of real Republican radicalism at home and abroad over the next four years.

Anatol Lieven is a senior associate at the Carnegie Endowment for International Peace in Washington, DC. His latest book, America Right or Wrong: an anatomy of American nationalism, was published last autumn by Harper Collins