It is too soon to tell whether voters will convert their anger at corporate America into a political groundswell in November, but the possibility has Republicans running scared. Corporate fraud is a good issue for Democrats, who are busy polishing their message about being the party of the people while the GOP caters to the fat cats. Just as welfare-fraud scandals a generation ago helped elect Ronald Reagan and embolden conservatives, the problems of corporate America may be a boon for Democrats. Hardly anybody was predicting a Democratic takeover of the House even a few weeks ago; now it seems likely. And if current trends hold, Democrats will increase their majority in the Senate.

If this transformation of power takes place, President Bush’s political situation will be roughly parallel to President’s Clinton’s after the 1994 election, when Republicans seized both houses of Congress. Clinton survived and even thrived under divided government with a strategy called “triangulation,” where he played off both the liberals in his party and the conservatives running the Congress. The high point or low point depending on your perspective was when Clinton signed a welfare-reform bill passed by the Republican Congress that ended the federal guarantee of benefits for poor children and gave states greater power to fashion their own welfare programs.

Health care reform is this generation’s social crisis, and if Democrats gain firm control of Congress they could pass a far-reaching reform program with extensive new benefits. Would Bush veto such a bill and give the Democrats a campaign issue for 2004? Or would he follow the Clinton model and sign anything that might get in the way of his re-election? It’s not an easy choice for Bush, who must always be mindful of his conservative base. Liberals never forgave Clinton for the welfare bill, but they weren’t that much of a factor because the party by then had moved to the center.

With Democrats in charge on Capitol Hill, what will happen to Bush’s agenda? More pointedly, what is Bush’s agenda? The large tax cut he pushed through in his first year is by far his greatest achievement, and protecting it will continue to be a priority. As deficits rise and pressure grows for prescription drug coverage for senior citizens, Democrats may move to stall the remainder of Bush’s tax cut until the budget is back in the black. If economic conditions don’t improve, Democrats may revive legislation to boost the minimum wage. If Bush vetoes a bill to help working men and women, just think what the Democratic presidential nominee could do with the issue in 2004.

Bush is already encountering serious difficulties in confirming judges in a Senate where the Democrats have only a single-seat majority. If the Democrats gain strength, Bush might have to re-think some of his choices and move more to the mainstream. If a Supreme Court seat opens up, Bush is almost compelled by politics to nominate an anti-choice justice to satisfy social conservatives, yet an open confrontation on the sensitive issue of abortion would draw bright lines between the parties that could hurt Bush in 2004. Bush did well among moderates in 2000 in part because he lowered the decibel level on emotionally divisive issues.

If Democrats hold majorities in both houses, they will be tempted to use their investigative powers to examine more deeply the abuses of corporate America. That could be a mistake. One of Al Gore’s better lines from the 2000 campaign was his promise that “Democrats will legislate, not investigate.” Passing programs popular with the American people and forcing Bush to either sign them the way he did campaign finance reform, or veto them, and create a campaign issue, is the better course. This kind of tension is what the founding fathers had in mind, and may be exactly what voters order up in November.

Prediction: Typically, the party not in the White House wins congressional seats in non-presidential election years. This year will not be an exception. Democrats will end up in solid control of both houses.