Yet, America was a strikingly open and expansive country. Reagan embodied it. Despite record-low approval ratings, he exuded optimism from the center of the storm. In the face of Moscow's rising power he confidently spoke of a mortal crisis in the Soviet system and predicted that it would end up on "the ash heap of history." Across the political aisle stood Thomas (Tip) O'Neill, the hearty Irish-American Speaker of the House, who personified the enormous generosity and tolerance of old-school liberalism. The country seemed welcoming and full of promise.

Today, by almost all objective measures, the United States sits on top of the world. But the atmosphere in Washington could not be more different from 1982. We have become a nation consumed by fear, worried about terrorists and rogue nations, Muslims and Mexicans, foreign companies and free trade, immigrants and international organizations. The strongest nation in the history of the world, we see ourselves besieged and overwhelmed. While the Bush administration has contributed mightily to this state of affairs, at this point it has reversed itself on many of its most egregious policies — from global warming to North Korea to Iraq.

George W. Bush is responsible for the demise of the United States. We must begin to think about life after Bush — a cheering prospect for his foes, a dismaying one for his fans, however few there may be at the moment. In 19 months he will be a private citizen, giving speeches to insurance executives. America, however, will have to move on and restore its place in the world. To do this we must first tackle the consequences of our foreign policy of fear. Having spooked ourselves into believing that we have no option but to act fast, alone, unilaterally and pre-emptively, we have managed in six years to destroy decades of international good will, alienate allies, embolden enemies and yet solve few of the major international problems we face.

In a global survey released last week, most countries polled believed China would act more responsibly in the world than the United States. How does a Leninist dictatorship come across more sympathetically than the oldest constitutional democracy in the world? Some of this is, of course, the burden of being the biggest. But the United States has been the richest and most powerful nation in the world for almost a century, and for much of this period it was respected, admired and occasionally even loved. The problem today is not that America is too strong but that it is seen as too arrogant, uncaring and insensitive. Countries around the world believe that the United States, obsessed with its own notions of terrorism, has stopped listening to the rest of the world.

More troubling than any of Bush's rhetoric is that of the Republicans who wish to succeed him. "They hate you!" says Rudy Giuliani in his new role as fear monger in chief, relentlessly reminding audiences of all the nasty people out there. "They don't want you to be in this college!" he recently warned an audience at Oglethorpe University in Atlanta. "Or you, or you, or you," he said, reportedly jabbing his finger at students. In the first Republican debate he warned, "We are facing an enemy that is planning all over this world, and it turns out planning inside our country, to come here and kill us." On the campaign trail, Giuliani plays a man exasperated by the inability of Americans to see the danger staring them in the face. "This is reality, ma'am," he told a startled woman at Oglethorpe. "You've got to clear your head."

The notion that the United States today is in grave danger of sitting back and going on the defensive is bizarre. In the last five and a half years, with bipartisan support, Washington has invaded two countries and sent troops around the world from Somalia to the Philippines to fight Islamic militants. It has ramped up defense spending by $187 billion — more than the combined military budgets of China, Russia, India and Britain. It has created a Department of Homeland Security that now spends more than $40 billion a year. It has set up secret prisons in Europe and a legal black hole in Guantánamo, to hold, interrogate and — by some definitions — torture prisoners. How would Giuliani really go on the offensive? Invade a couple of more countries?

The presidential campaign could have provided the opportunity for a national discussion of the new world we live in. So far, on the Republican side, it has turned into an exercise in chest thumping. Whipping up hysteria requires magnifying the foe. The enemy is vast, global and relentless. Giuliani casually lumps together Iran and Al Qaeda. Mitt Romney goes further, banding together all the supposed bad guys. "This is about Shia and Sunni. This is about Hizbullah and Hamas and Al Qaeda and the Muslim Brotherhood," he recently declared.

But Iran is a Shiite power and actually helped the United States topple the Qaeda-backed Taliban regime in Afghanistan. Qaeda affiliated radical Sunnis are currently slaughtering Shiites in Iraq, and Iranian backed Shiite militias are responding by executing and displacing Iraq's Sunnis. We are repeating one of the central errors of the early cold war — putting together all our potential adversaries rather than dividing them. Mao and Stalin were both nasty. But they were nasties who disliked one another, a fact that could be exploited to the great benefit of the free world. To miss this is not strength. It's stupidity.

Such overreactions are precisely what Osama bin Laden has been hoping for. In a videotaped message in 2004, bin Laden explained his strategy with astonishing frankness. He termed it "provoke and bait": "All we have to do is send two mujahedin ... [and] raise a piece of cloth on which is written 'Al Qaeda' in order to make the generals race there, to cause America to suffer human, economic and political losses." His point has been well understood by ragtag terror groups across the world. With no apparent communication, collaboration or further guidance from bin Laden, small outfits from Southeast Asia to North Africa to Europe now announce that they are part of Al Qaeda, and so inflate their own importance, bring global attention to their cause and — of course — get America to come racing out to fight them.

The competition to be the tough guy is producing new policy ideas, all right — ones that range from bad to insane. Romney, who bills himself as the smart, worldly manager, recently explained that while "some people have said we ought to close Guantánamo, my view is we ought to double [the size of] Guantánamo." In fact, Romney should recognize that Guantánamo does not face space constraints. The reason that President Bush wants to close it down — and it is he who has expressed that desire — is that it is an unworkable legal mess with enormous strategic, political and moral costs. In a real war you hold prisoners of war until the end of hostilities. When does that happen in the war on terror? Does Romney propose that the United States keep an ever growing population of suspects in jail indefinitely without trials as part of a new American system of justice?

In 2005 Romney said, "How about people who are in settings — mosques, for instance — that may be teaching doctrines of hate and terror? Are we monitoring that? Are we wiretapping?" This proposal is mild compared with what Rep. Tom Tancredo suggested the same year. When asked about a possible nuclear strike by Islamic radicals on the United States, he suggested that the U.S. military threaten to "take out" Mecca.

Giuliani praises the Bush administration's aggressive approach for preventing another terrorist attack on U.S. soil after September 11. Certainly the administration deserves credit for dismantling Al Qaeda's infrastructure in Afghanistan and in other countries where it once had branches or supporters. But since 9/11 there has been a series of terrorist attacks in countries like Britain, Spain, Morocco, Turkey, Indonesia and Saudi Arabia — most of which are also very tough on terrorism. The common thread in these attacks is that they were launched by local groups. It's easier to spot and stop foreign agents, far more difficult to detect a group of locals.

The crucial advantage that the United States has in this regard is that we do not have a radicalized domestic population. American Muslims are generally middle class, moderate and well assimilated. They believe in America and the American Dream. The first comprehensive poll of U.S. Muslims, conducted last month by the Pew Research Center, found that more than 70 percent believed that if you worked hard in America, you would get ahead. That compares with 64 percent for the general U.S. population. Their responses to almost all questions were in the mainstream and strikingly different from Muslim populations elsewhere. Some 13 percent of U.S. Muslims believe suicide bombings can be justified. Too high, for sure, but it compares with 35 percent for French Muslims, 57 percent for Jordanians and 69 percent for Nigerians.

This distinct American advantage — which testifies to our ability to assimilate new immigrants — is increasingly in jeopardy. If leaders begin insinuating that the entire Muslim population be viewed with suspicion, that will change the community's relationship to the United States. Wiretapping America's mosques and threatening to bomb Mecca are certainly a big step down this ugly road.

Though Democrats sound more sensible on many of these issues, the party remains consumed by the fear that it will not come across as tough. Its presidential candidates vie with one another to prove that they are going to be just as macho and militant as the fiercest Republican. In the South Carolina presidential debate, when candidates were asked how they would respond to another terror strike, they promptly vowed to attack, retaliate and blast the hell out of, well, somebody. Barack Obama, the only one to answer differently, quickly realized his political vulnerability and dutifully threatened retaliation as well. After the debate, his opponents leaked furiously that his original response proved he didn't have the fortitude to be president.

In fact, Obama's initial response was the right one. He said that the first thing he would do was make sure that the emergency response was effective, then ensure we had the best intelligence possible to figure out who had caused the attack, and then move with allies to dismantle the network responsible.

We will never be able to prevent a small group of misfits from planning some terrible act of terror. No matter how far seeing and competent our intelligence and law enforcement officials, people will always be able to slip through the cracks in a large, open and diverse country. The real test of American leadership is not whether we can make 100 percent sure we prevent the attack, but rather how we respond to it. Stephen Flynn, a homeland security expert at the Council on Foreign Relations, argues that our goal should be resilience — how quickly can we bounce back from a disruption? In the materials sciences, he points out, resilience is the ability of a material to recover its original shape after a deformation. If one day bombs do go off, we must ensure that they cause as little disruption — economic, social, political — as possible. This would deprive the terrorist of his main objective. If we are not terrorized, then in a crucial sense we have defeated terrorism.

The atmosphere of fear and panic we are currently engendering is likely to produce the opposite effect. Were there to be another attack, politicians would fulfill their pledges to strike back, against someone. A retaliatory strike would be appropriate and important — if you could hit the right targets. But what if the culprits were based in Hamburg or Madrid or Trenton? It is far more likely that a future attack will come from countries that are unknowingly and involuntarily sheltering terrorists. Are we going to bomb Britain and Spain because they housed terror cells?

The other likely effect of another terror attack would be an increase in the restrictions on movement, privacy and civil liberties that have already imposed huge economic, political and moral costs on America. The process of screening passengers at airports, which costs nearly $5 billion a year, gets more cumbersome every year as new potential "risks" are discovered. The visa system, which has already become restrictive and forbidding, will get more so every time one thug is let in.

Unfortunately, our fears extend well beyond terrorism. CNN's Lou Dobbs has become the spokesman of a paranoid and angry segment of the country, railing against the sinister forces that are overwhelming us. For the right, illegal immigrants have become an obsession. The party of free enterprise has dedicated itself to a huge buildup of the state's police powers to stop people from working.

For the Democrats, the new bogeymen are the poorest workers in the world — in China and India. The Democrats are understandably worried about the wages of employees in the United States, but these fears are now focused on free trade, which is fast losing support within the party. Bill Clinton's historical realignment of his party — toward the future, markets, trade and efficiency — is being squandered in the quest for momentary popularity. Whether on terrorism, trade, immigration or internationalism of any kind, the political dynamic in the United States these days is to hunker down.

To recover its place in the world, America first needs to recover its confidence. For those who look at the future and see challenges, competition and threats, keep in mind that this new world has been forming over the last 20 years, and the United States has forged ahead amid all the turmoil. In 1980, the U.S. share of global GDP was 20 percent. Today it is 29 percent. We lead the world in technology and research. Our firms have found enormous success in new markets overseas. We continue to generate new products, new brands, new companies and new industries.

We are not really in competition with Chinese and Indian workers making $5 a day. We want Americans to make things that they can't, move up the value chain and work on increasingly sophisticated products and services. We have an educational system that can help make this happen. Of the 20 best universities in the world, 18 are American. And the quality of American higher education extends far and deep, from community colleges to technical institutes.

Perhaps the most hopeful sign for the United States is that alone among industrial nations, we will not have a shortage of productive citizens in the decades ahead. Unlike Germany, Japan and even China, we should have more than enough workers to grow the economy and sustain the elderly population. This is largely thanks to immigration. If America has a core competitive advantage, it is this: every year we take in more immigrants than the rest of the world put together.

In many senses, the world is moving in the right direction. In continent after continent, countries are adopting more sensible policies. That is why we see the extraordinary phenomenon of truly global growth. America, Europe, Japan, China, India, Brazil, Russia, Turkey are all growing robustly. Even in Africa, the mood is different these days. Fifteen countries on the continent — with about a third of its population — are growing at more than 4 percent a year and are better governed than ever before. True, the United States faces a complicated and dangerous geopolitical environment. But it is not nearly as dangerous as when the Soviet Union had thousands of missiles aimed at American, European and Asian cities and the world lived with the prospect of nuclear war. It is not nearly as dangerous as the first half of the 20th century, when Germany plunged the globe into two great wars.

In order to begin reorienting America's strategy abroad, any new U.S. administration must begin with Iraq. Until the United States is able to move beyond Iraq, it will not have the time, energy, political capital or resources to attempt anything else of any great significance. The first thing to admit is that our mission in Iraq has substantially failed. Whether it was doomed from the outset or turned into a fiasco because of the administration's arrogance and incompetence is a matter that historians can determine. The president's central argument in favor of the invasion of Iraq — once weapons of mass destruction were not found — was that it would be a model for the Arab world. In fact, the country has fallen apart. Two million people have fled; more than 2 million are internally displaced. Shiite extremists are in power in much of the country, imposing a thuggish and draconian version of theocratic rule. Normal life for nor-mal people — schools, universities, hospitals, factories and offices — is a shambles. If anything, Iraq has become a model in exactly the opposite sense from what Bush had hoped. It has become a living advertisement of the dangers of illiberal democracy.

Things could improve in Iraq over time. But that will take years, perhaps decades. It would be far better for us to reduce our exposure to the current civil war, draw down our forces, let Iraq's internal political forces play themselves out and restrict our troops to certain limited but core missions. We need to continue the battle against Qaeda style extremists, maintain a presence to reassure and secure the Kurdish region, and continue to train and keep watch over the Iraqi Army. All this can be done with a substantially smaller force — about 50,000 troops, which is also a more sustainable level for the long haul.

The administration has — surprise — tried to play up fears of the consequences of a drawdown in Iraq which is always described as a Vietnam style withdrawal down to zero. It predicts this will lead to chaos, violence and a victory for terrorists. When we listen to these forecasts, it is worth remembering every administration prediction about Iraq has been wrong. Al Qaeda is a small presence in Iraq, and ordinary Sunnis are abandoning support for it. "If we leave Iraq, they will follow us home," says the president. Can they not do so now? Iraq's borders have never been more porous. Does he think that Iraqi militants and foreign terrorists are so distracted by our actions in Iraq they have forgotten there are many more Americans in America?

As for the broader Sunni-Shiite civil war, even if we improve the security situation temporarily, once we leave the struggle for power will resume. At some point, the Shiites and the Sunnis will make a deal. Until then, we can at best keep a lid on the violence but not solve its causes. To stay indefinitely is simply to keep a finger in the dike, fearful of the outcome. Better to consolidate what gains we have, limit our losses, let time work for us and move on.

There is a world beyond Iraq. The primary challenge we face in the Middle East is the rise of Iran. No country has caused greater panic among American elites — of both parties. There are many influential voices arguing for military attacks on Tehran. But let's keep in mind this is a poorly run, internally divided oil tyranny that is increasingly antagonizing the rest of the world. It is insecure enough to have arrested Iranian-American civilians and warned its own scholars never to talk to foreigners at conferences abroad. These are not the signs of a healthy system. Iran is a serious and complex problem, but it is not Hitler's Germany. Its total GDP is less than one third of America's defense budget. A nuclear armed North Korea has not been able to change the dynamics of global politics. A nuclear armed Iran — and we are still far from that point — will not bring about the end of the world as long as we keep it tightly contained.

After years of empty threats and foolish rhetoric, the Bush administration is moving toward a more sensible containment strategy on Iran, though one that faces continued resistance from hard liners like Dick Cheney. The United States should ensure the reality of a resurgent Iran brings together the Arab world. The focus should stay on Iran's actions — and not U.S. threats.

No magic formula exists to stop Iran from going nuclear, nor to change Iran's regime. But the strategy we have adopted against so many troublesome countries over the last few decades — sanction, isolate, ignore, chastise — has simply not worked. Cuba is perhaps the best example of this paradox. Having put in place a policy to force regime change in that country, we confront the reality that Fidel Castro will die in office the longest serving head of government in the world. On the other hand, countries where we have had the confidence to engage — from China to Vietnam to Libya — have shifted course substantially over time. Capitalism and commerce and contact have proved far more reliable agents of change than lectures about evil. The next president should have the courage to start talking to rogue regimes, not as a sign of approval but as a way of influencing them and shaping their environment.

There are many specific issues that the United States needs to get far more engaged in, from the Israeli-Palestinian problem to global warming to Darfur to poverty alleviation. Most important of all is the shift of global power toward new countries in Asia, and what that means for international order and cooperation. But to succeed at any of this, we will need greater global legitimacy and participation. We are living in new times. As countries grow economically and mature politically, they are demanding a greater voice in global affairs and a seat at the high table. The United States should make sure that it is listening to these voices, new and old, and recognize that to function effectively in this new world, it can lead only through partnerships, collaborations and co-operation. The Bush-Rumsfeld model of leadership — through declarations, threats and denunciations — is dead.

Above all, the United States has to find a way to send a powerful and consistent signal to the world we understand the struggles the world is involved in — for security, peace and a better standard of living. As Barack Obama said in a speech in Chicago, "It's time to ... send a message to all those men and women beyond our shores who long for lives of dignity and security that says, 'You matter to us. Your future is our future'."

Some of foreign policy is what we do, but some of it is also who we are. America as a place has often been the great antidote to U.S. foreign policy. When American actions across the world have seemed harsh, misguided or unfair, America itself has always been open, welcoming and tolerant. The United States in the 1970s, India was officially anti-American. During this time, the reality of the America was a powerful refutation of the propaganda and caricatures of its enemies. But today, through inattention, fear and bureaucratic cowardice, the caricature threatens to become reality.

At the end of the day, openness is America's greatest strength. Many people on both sides of the political aisle have ideas that they believe will keep America strong in this new world — fences, tariffs, subsidies, investments. But America has succeeded not because of the ingenuity of its government programs. It has thrived because it has kept itself open to the world — to goods and services, ideas and inventions, people and cultures. This openness has allowed us to respond fast and flexibly in new economic times, to manage change and diversity with remarkable ease, and to push forward the boundaries of freedom and autonomy.