From six months ago, the conventional wisdom has turned around by almost 180 degrees. Last summer it was assumed that a few short shots of monetary stimulus had closed out the credit crisis. Last months pulverizing housing numbers, combined with the high inflation numbers for 2007, the worst in half a generation, have persuaded a number of people across the spectrum that "something must be done right now." Not everyone is persuaded, but if it can move through this Congress to be signed by this President, it is safe to say that within the Beltway the argument is leaning towards "do something" fairly hard.

However, as with a number of do something moments, what is being done, under what name, and for whom, is confused. Rather than talk about specifics being floated at the moment, because the debate wants to treat this stimulus moment as separate from everything else, let's look at the three parts of dealing with an economic downturn: relief, restructuring, stimulus.

Relief identifies a group of people particularly hard hit by the downturn, and provides them with a short term hit of liquidity or income so that they do not become insolvent and collapse to a lower level of economic activity permanently. Not all relief is a good idea. The Republicans have for a generation pushed "tax relief" - especially for people who make lots of money. The rest of us have seen tax shifting, but not much actual "relief" from our tax burden.

Restructuring deals with creative destruction. It means paying of insured depositors in bank failures, it means ending fiscal and regulatory choices which are no longer performing, if they ever did, and it means providing incentives going forward to new areas.

Stimulus is counter-cyclical spending designed to get people back to work as quickly as possible after the downturn.

Let's look at the last economic downturn and see what choices were made.

In the last down turn investors got a massive relief package in the form of long term reductions in taxation. Ordinary tax payers got a $300 prebate, and some reduction in withholding. Some taxpayers got credits for dependents.

The Restructuring was to a war time economy. This is far broader than Afghanistan and later Iraq, but includes things such as No Child Left Behind, and the Department of Homeland Security. A shift from consumer technology to security technology. It also went with the shift in fiscal policy from deficit reduction, to massive, and often unaccounted for, deficit spending.

The Stimulus was the actual wave of spending released by the invasion of Iraq, and the appropriations since then.

These are not in isolation of monetary policy, which was extremely, one might even say, historically, accommodative.

Historically speaking, the rebound in the labor market accompanies fiscal stimulus. Where it is present, the rebound happens like a shot after the contraction is over, when it is not, the rebound in the labor market is delayed. In the last expansion there was a deliberate decision to delay stimulus until the invasion, and as a result the labor market did not really recover until mid 2003, even though the rest of the economic indicators had left recession before that.

One of the other nets of the decisions was that a great deal of the benefits went to a very small slice of the population. The rich bounced back. The rest of us worked harder and got less, if we were working at all: the 2000's featured the longest period of long term unemployment since the early 1960's.

Many of these decisions will be made based on the results of the 2008 election. The 2008 election will determine, to no small extent, what the next economic cycle looks like, how long it will last, and who will get the benefits. As little enthusiasm as many candidates excite among the respective bases, the reality is that this election does mean a great deal. It is not a holding pattern election.

While policy proposal specifics are the Kabuki of medium and high information political discourse, what is more important is the fundamental philosophical thrust of a party, a caucus in Congress, or a President. This is because no proposal survives contact with reality, and every final economic plan is a matter of crafting specific demands into a large picture.

In the present circumstances, the best relief program would end the tax breaks for the wealthy and shift that money in the short term to buffering groups hard hit by the economic downturn. Tax credits and so on are, almost by definition, not the best way to do this, because they give money to people who already have jobs. This violates one of the most important liberal principles: demand spreading. Demand spreading means, all other things being equal, it is better that more people have some money, than some people having more money. Social Security is based on this principle as is the liberal theory of government starting with FDR. FDR ran both as Governor of New York and for the Presidency under the theory that demand was misallocated, and that people outside of the centers of economic activity needed to be able to afford goods. Universalization of electricity and phone service were undertaken under this theory, as were the various subsidy programs.

Thus as soon as a candidate, caucus or program makes "tax relief" its center, it is already marching to the right.

In the present circumstances, the best relief programs would be aimed at groups who are dislocated, or who have been dislocated as a matter of course. One of these groups consists of the National Guard and others who have disproportionately born the brunt of Iraq. Relief programs which treat them as deserving of "tax relief" on soldier's pay, miss the point. The best relief programs would also interlock going forward with restructuring.

This means, ending Iraq. Not sort of renouncing territorial ambitions in Iraq and surrendering to the Republic of Al-Anbar, which, for those of us paying attention, is what just happened - but pulling out of Iraq. This has two advantages. First it is a vast amount of money for other projects. Second, right now the US is the largest single source of economic activity in Iraq. Without US dollars and projects flowing in - to do things that aren't getting done anyway according to the GAO - there will, one can bet, be a great focusing of minds in Iraq on how to get the oil flowing and on ships.

Restructuring also needs to be aware of a simple fact: namely that a massive bank bail out is coming. Charlie Rangel has already indicated a willingness to do a complete overhaul of the tax structure. One hopes that his preferred candidate is willing to do this as well.

Restructuring also needs to address how we are going to reëmploy the massive glut of residential capital that has been constructed, and how to import less oil and export more goods.

Restructuring would ideally address sources of inflationary pressure: food, health care and energy.

With these pieces in progress, the actual need for stimulus can be examined. This will be far less actual stimulus as such, than would otherwise be needed. The American economy needed massive stimulus this last decade in order to deal with a host of truly astoundingly rotten fiscal priorities. That is, we needed far more deficit spending than would otherwise have been the case. While we should never shy away from borrowing when we need to, and spending what we must, we should always be seeking to borrow and spend the least necessary, not the most possible. It's better go keep credit good, it is better to keep the money in the hands of the general economy, and it is better for Government to pursue plans that generate enough economic activity to support those plans by the increased tax revenues that come with increased activity. While nominal deficits aren't to be feared, actually downward spirals in the national debt - where the debt is growing faster than our real ability to pay it back - are to be avoided except in cases where swastikas and rising suns are actually blooming around the world, and not just in the imaginations of the 101st fighting keyboarders.

In our present circumstances the progressive movement has put forward the most coherent vision that addresses these three points. Relief can be expanded by ending Iraq and ending tax breaks for the very wealthy. Restructuring can be best pursued by ending the weak dollar policy, and making a non-carbon based energy system a long term goal, and universal, provider-patient health care, ideally under a single payor model a short term goal. Stimulus will be accomplished by specific spending programs designed to make these two goals possible. The conservative, moderate and reactionary movements have not come close to creating as coherent a vision of what needs to be done and how to do it.

Right now the conservative-reactionary coalition proposes a tiny deficit based stimulus/relief package, continued weak dollar policies, continued expenditure on Iraq, continued deficit spending as far as the eye can see, no effective steps to contain energy, health care or food inflation, and no money being allocated for the inevitable financial bailouts, other than to sell Wall Street to Dubai one bank at a time.

The moderate movement proposes that we should do all of this, only with more civil discourse.

There are clear choices, and while the voting booth is a woefully inadequate instrument by itself to reach them, it is one of the tools we have. Which, not coincidentally, means making sure that t works as well as is possible, as opposed to as well as is convenient for particular interest. Among these clear choices are whether we are going to restructure away from a series of very bad choices made this decade, and towards better ones.

So far the progressive movement, and only the progressive movement, has made this commitment.