Now that Barack Obama has won the presidency, a swath of the Washington establishment is pressing him to answer what it considers an urgent question: How will he scale back his plans--for tax cuts, for health care reform, for education--in response to the economic emergency? Actually, they were incessantly asking that before the election--in each of the three presidential debates, in fact. And even members of his own party have joined the David Gergens and Bob Schieffers in demanding that Obama retrench. This is, to say the least, a bizarre fixation, one that simultaneously misreads economics, politics, and history.

The complaint about Obama's agenda begins with the fact of rising deficits. The argument holds that they necessitate the scaling back of expenditures. This would be a sound argument in decent economic times, but in the early stages of a recession it is madness. Even conservative economists like Martin Feldstein have called on the federal government to spend billions on fiscal stimulus, deficit be damned. That's the surest way to hasten recovery.

Of course, there are good reasons to fret over long-term deficits. They can siphon money from investments that improve the living standards of future generations. But, aside from his stimulus package, Obama's agenda is designed precisely to provide investments that would improve future living standards.

Take his health care reform plan. Sure, it costs money. But spiraling health care costs are also driving up future deficits--a fact that has swung the moderate wing of the party associated with Robert Rubin behind reform. The Rubinites have come to understand that reform isn't an impediment to long-term solvency but a necessary step toward it. We doubt that future generations would thank us if we bequeathed them a sputtering jalopy of a health care system that required ever greater expenditures lest it break down completely.

Obama's first task, then, is to upend the mindless conventional wisdom which holds that he must never implement the agenda he campaigned on. And this will involve straightening out some of his fellow Democrats who believe that he should replicate the fiscal strategy of the early Clinton era, when the administration scaled back its more ambitious spending plans and focused instead on deficit reduction, a choice that laid the groundwork for the boom of the late 1990s. But the analogy isn't terribly apt. By the time Clinton changed tack, the economy was already well on the path to recovering from the recession- -a very different situation from the one we now face.

There's another lesson from the Clinton presidency that is being widely misapplied these days. Democrats worry that, if Obama tries to do too much too soon, his first two years in office will end with a Republican rout in the midterm elections--just as Clinton's did. "We moved fast in the 103rd [Congress], and what did it get us?" mused House Majority Whip James Clyburn, who instead advocates, as a Wall Street Journal article characterized it, "a pragmatic approach to governance that would begin with items that have proven bipartisan support before tackling ambitious elements such as universal health care."

This utterly misunderstands the nature of the Clinton debacle. Clinton was punished not because he tried to reform the health care system but because he failed. Voters had spent a year listening to Clinton tell them how the health care system was broken; then they spent another year and a half hearing about how he presided over a legislative stalemate. And, as his plan stalled, Republicans managed to portray it in fearful and inaccurate terms.

The politics of health care reform shouldn't be anywhere near that complicated. Instead of dithering over a deal, Democrats need to remind their Republican colleagues of the price the GOP paid for opposing the creation of Social Security and Medicare. Sure, they can oppose this new program as a socialistic nightmare. But they will be forced to spend the rest of their careers defending their vote to deprive voters of health care.

None of this is to say that Obama should abandon moderation or bipartisanship. There are areas for cooperation. Education is one: His support for teacher accountability and flexible hiring practices would attract Republican backing. And he ought to make a point of forming bipartisan coalitions to root out waste in the budget and tax code.

But, in the end, there's probably nothing the Democrats can do to avoid losing seats in 2010. Almost all presidents suffer defeats during their first midterm elections. The greatest risk for Democrats is not that Obama will try to do too much, but that their terror of failure will lead them to waste an historic opportunity. This is not a Clintonian moment. It is more like the moment Lyndon Johnson inherited in 1965, or the one Franklin Roosevelt faced in 1933--a chance to reshape American government. The Democrats have it in their grasp to master the great problems of public life if they can summon their collective nerve. The only thing they have to fear is fear itself.

This article originally ran in the November 19, 2008 issue of the magazine.