Rupert Cornwell: Hubris followed by nemesis: the verdict on perhaps the worst presidency in US history

A precious and long-lost commodity has returned to American politics this morning. It is called reality. For the past two years, we have been inhabiting a dream world, conjured up by the witchdoctors in the White House, and sustained by their Republican stooges who ruled Capitol Hill.

George W Bush continued to wage his misbegotten war, vowing to "stay the course" (or whatever was the formulation of the hour). In Congress his pliant troops used their majority to suspend the legislature's constitutional duty to call the administration to account, flouting the system of checks and balances on which American democracy depends. Wilfully divorced from reality, a desperately unpopular president continued to govern by pandering to his conservative base.

All that, mercifully, is now over. Statistically, this midterm defeat is smaller than that suffered by Bill Clinton in 1994, at the hands of Newt Gingrich and his "Republican revolution". Then, the Democrats lost 52 seats in the House and control of the Senate. This time the Republicans will have lost 30 at most, and might just cling on to the Senate.

But make no mistake. The true upheaval is at least as great. Not only has gerry-mandering reduced the number of competitive House seats. Clinton was just two years into his first term, with everything to play for. The best Bushcan hope for is to escape with a semblance of respectability from what historians already debate may be the worst presidency in American history.

Hubris has been followed by nemesis. In retrospect, the highwater mark of that hubris came a couple of weeks before Bush won re-election in November 2004 - when Karl Rove was marshalling the forces of Christian conservatives to defeat John Kerry, and when Bush loved to brag how he never looked at a newspaper.

The trouble was, a White House aide sneered in a wonderful piece by Ron Susskind in The New York Times magazine, that the despised media lived in a "reality-based community" that believed "solutions emerge from the judicious study of discernable reality". Well, not only the media, but most of the human race. But not, of course, this White House, and this president guided by instinct, not by facts, who preferred the counsel of "a higher father" to that of his vastly experienced biological sire. The world didn't work like that any more, the aide went on. "When we act, we create our own reality." That conceit, and that pseudo-reality, have now surely been destroyed.

Rove's aura of invincibility and omniscience has been shattered. For his boss, yesterday must have been the most dispiriting morning of his life, as he woke to contemplate the transformed political landscape. The old Bush presidency, of self-certainty and swagger ("In Texas, we call it walking") is dead and buried.

What remains is a rump for which the term "lame duck" is probably an understatement. This proud and unbending man, who never admits to the smallest mistake, now faces two years in which he must make compromises with a hostile Congress, if he is to achieve anything at all. Above all, he must somehow find an orderly way out of his war.

His options are dreadful. He threw a bone to critics by at last sacking Donald Rumsfeld, the day-to-day manager of the Iraq mess, whose relationship with reality had been as tenuous as that of his boss. But that is also tantamount to an admission that the war was wrong. No less important, it also mean confirmation hearings for Rumsfeld's replacement - hearings that may well turn into the Congressional inquisition on the war, its prosecution and the intelligence fiasco that preceded it, that the White House has fought tooth and nail to avoid.

But the Defence Secretary's departure does not end the war, for which Mr Bush insists that nothing short of victory will suffice. He can only hope against hope that the bipartisan Iraq Study Group chaired by the old Bush family consigliere James Baker (one of those scorned realists with whom his earthly father used to surround himself) will come up with an exit strategy, albeit one perforce based on "a judicious study of discernable reality".

Paradoxically, Bush's strongest tactical card over Iraq is the sheer magnitude of the disaster he has created. Bush is correct to say Democrats have no viable alternative, for a simple reason. There simply isn't one. But that leaves the ball in Bush's court - and alas, "discernable reality" also points towards some form of accommodation with Iran. Win or lose the elections, Iran was already potentially an even thornier problem than Iraq for his remaining time in office. Their loss makes even less likely the use of the military option by a president approved of by only 35 per cent of his countrymen. Among Tuesday night's winners may be counted not only the Democrats but also Mahmoud Ahmadinejad.

What can save Bush, and offer his Republicans a chance of hanging on to the White House two years hence? His best hope is that Democrats overplay their hand, especially if they find themselves in command of the Senate as well as the House. Gingrich made that mistake a decade ago, allowing Clinton to exploit his overreaching to win a second term in 1996. Heedless of the lesson, the Republicans launched the absurd impeachment effort that contributed to losses in the 1998 midterms, against every historical trend.

For veteran Democrats steamrollered by Gingrich and his successors into virtual irrelevance in the House for the past dozen years, the urge to get even must be close to irresistible right now. But my guess is they will resist it. Democrats understand as well as anyone that these midterms were not won by them so much as lost by the Republicans.

They know full well that an eminently winnable presidential election is just two years off. It makes little sense to alienate a public disposed to give them a chance, by launching a revenge effort at impeachment or by putting headline-grabbing investigation by TV klieg-light ahead of measured legislative proposals, even if these latter invite a presidential veto.

No less important, the make-up of the Democratic delegation in the House has changed with the passage from minority to majority. True, committees will be chaired by old liberal lions. But the newcomers are predominantly moderate Democrats who will resist any effort by Nancy Pelosi, the Speaker-in-waiting, to live up to the myth of her San Francisco political base. And this leads to the other US political paradox of the hour.

The Democrats may have won. But Congress has moved not leftwards, but rightwards. Not only are Democrats more conservative. So too are their opponents after Tuesday's cull of Republican moderates. These days, Bill Kristol, founding father of the modern neocon movement, and advocate of military action against Iran, ploughs a lonely furrow. But his judgement on the vote is spot on. "America remains a moderately conservative country, and Democrats have adjusted to the fact." In short, they have adjusted to reality. The question is, can George W Bush do likewise?