The appalling inability of the Bush administration and Congress to work out a sensible program to cut the huge national budget deficit raises new questions about "the American condition." Is our economic system showing basic flaws just at the moment oppressed peoples in the Soviet Union and Eastern Europe look to capitalism as their savior? In short, is the United States already a second-class power?

Historian Paul Kennedy, in his 1987 blockbuster, "The Rise and Fall of the Great Powers," suggested that America was likely to suffer the same fate as Spain and England, drifting into second- or third-rate status through what he called "imperial overstretch."

In the last couple of years, Kennedy's thesis has gained support from those who see not only a U.S. economic decline, but an almost mirror-image rise of Japan. Some feel that Japan in many ways is already No. 1, that Pax Nipponica has been replacing Pax Americana, and that the only question is how much worse for America the situation is going to become.

In "The End of the American Century," former Morgan Guaranty vice president Steven Schlosstein tells a story that made the rounds in Washington last year:

George Bush suffers a stroke, making Dan Quayle acting president. Recovering three years later, Bush asks Quayle how the budget deficit is doing.

"With help from Japan, it's down," Quayle answers. "And inflation, interest rates and the trade deficit are down, too."

"Great," sighs Bush. "How much is milk?"

"About two hundred yen a quart," Quayle answers.

To Schlosstein, it's more than a joke. He sees the yen replacing the dollar as the world's most important currency as Tokyo uses its industrial, technological and financial strength to dominate the international political system.

To add to the gloomy perspective, there should have been the prospect, as the Cold War with the Soviet Union ended, to enjoy a "peace dividend" helping America to regain a competitive edge in civilian pursuits where it has been outmaneuvered by Europe and Asia. But along came Saddam Hussein and the invasion of Kuwait.

However, not everyone agrees with the "declinists." A number of scholars argue that things aren't that bad, or if they are, the ballgame isn't over, because they can be corrected.

Joseph S. Nye Jr., in "Bound to Lead," asserted that the United States -- while needing to correct obvious failings such as its dismal educational system, poor savings record, concentration on short-term profits -- is still unique and thus will remain the most influential country in the world.

Among others more optimistic than Kennedy are two old Washington hands of differing political persuasion, Henry Nau, associate dean at George Washington University, who served on Ronald Reagan's National Security Council in 1981-83, and Harvard professor Richard Cooper, who was undersecretary of state for economic affairs in the Carter administration.

Nau, in a new book titled "The Myth of America's Decline," argues that Pax Americana has been replaced not by Pax Nipponica but by "a Western era in which non-communist and now reforming communist countries increasingly share American purposes." Like Nye, Nau contends that America's real power in the world is based not so much on material strength but on political leadership.

The "golden age" of America's influence from the end of World War II to the beginning of the Vietnam War came about, Nau says, because the United States inspired the reconstruction of Europe and Asia through the Marshall Plan. Economic growth soared as we pursued free trade, stable prices and limited government interference with markets. Similarly, Cooper looks to a future in which America seeks to share global power with a stronger Japan and Germany instead of concluding a collision is inevitable.

In a debate last November with Kennedy before a congressional subcommittee, Cooper contended that the perception we are on a downward trend comes from idealizing the '50s and the '60s. He pointed out that during the past 25 years, many other countries, not just Japan and Germany, have been growing faster than the United States.

Thus, there has been a relative decline in the U.S. share of global production. Later on, Japan and Germany will also be in relative decline as other countries catch up in technological superiority. "There is nothing that we can do about it, and we should adapt our thinking to whatever consequences should flow from that," Cooper said.

But even the optimists should worry about the mess in Washington: a complacent attitude toward budget deficits, the need to boost productivity and to reshape the educational system can spell disaster. To the rest of the world, we look ungovernable.