LONDON – As said Mr Micawber: “Annual income twenty pounds, annual expenditure nineteen, nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds, nought and six, result misery.” If you can get past the Dickensian way of counting then there is a message for the U.S. today. It no longer has the financial wherewithal to do what it wants to do.

If Barack Obama wins the election he has pledged to bring in a major reform of the health services and he has promised to cut the tax rate for the middle and work ing classes. He wants to expand the war in Afghanistan. If John McCain wins he wants to keep in place the tax breaks for the rich, fight to “victory” in Iraq, expand the war in Afghanistan and challenge Iran in such an assertive way that it could well lead to another war.

There is no chance that either candidate, after this financial disaster and the mammoth commitment to federal expenditure, (assuming Congress goes ahead and passes the bail-out bill), can square the circle on future financial outlays.

What has to go? There cannot be a strong America abroad without a strong America at home. At the moment many, if not a majority, of Americans are deeply pessimistic about their future. Obama is right to have insisted that he cannot break his promises for universal health care and tax reduction if the spirits and wellbeing of the country are going to revive.

McCain’s arithmetic of confrontation does not add up. It would lead America into more expensive entanglements plus, if he goes on like he does about Russia, to the absurdity of breaking up promising trade patterns with a revived Russia, which is potentially one of the richest countries in the capitalist world.

Obama’s arithmetic is more complicated. If he can get American troops quickly out of Iraq, which he has pledged to do, then, theoretically, he will have soldiers and money from that budget to expand the war in Afghanistan. If he lowers the tone of confrontation with Iran and concentrates on negotiation then he can avoid an expensive clash there. Likewise, if he can advance the cause of peace between Israel and Palestine, the need for such an expensive financial commitment to Israel will diminish. Indeed, cutting the budget for Israel is a stick that needs to be deployed.

But pulling the nuclear teeth in North Korea is going to cost much more, especially if the Six Party talks advance to the point that America has to pay for the North’s energy needs until the promised free reactor can be completed. And if the regime should collapse on Obama’s watch then the U.S will be duty bound to share a good part of the burden with South Korea, which presumably will absorb the North.

Obama will want to continue George W. Bush’s aid increases to Africa. He will want to pay off America’s debt to the United Nations. He will want to expand world-wide efforts to eradicate malaria and to expand the education of poor girls.

All this begs the q uestion how can America afford an ever expanding defense budget? How can America invest so much in its anti-ballistic missile program that many experts consider both unworkable and unnecessarily provocative? How can America afford to continue to boost its military expenditure to countries once in the Soviet orbit but now exist in its “near abroad”?

It cannot all be done. Much will have to go, starting with the American presence in Iraq. The Iraqi government has to be given a date when America will withdraw. Neighboring states must take on their responsibility for peacekeeping, policing and development. At home the military budget and the confrontations it allows for must be sharply paired down.

Afghanistan is a tricky one, partly because Obama seems so committed to further war and partly because Americans still feel that slaughtering Al Qaeda in its liar is an important priority. But the war in Afghanistan is a ship to nowhere. America and NATO will go the way of the Russians, the British and Alexander before them. Expanding the war into Pakistan will create immense instability in a country already angry that so much money from America goes into the pockets of the Pakistan military and not into the economy.

The capture of Osama bin Laden and his associates in their mountain redoubt can only be done by clever police work – just as many Nazis were hunted down after the War. A costly military sledgehammer is quite counterproductive, as well as causing intolerable amounts of collateral damage to the innocent of both Pakistan and Afghanistan, and making peace with India over Kashmir impossible. Why wind up the passions in two fragile, nuclear-armed nations?

This economic and financial crisis forces the American presidential candidates to think hard again.