These are depressing times for liberals on both sides of the Atlantic, with the size and scope of the state under assault. But the debate in the US is at least in one way bracing: it has lately become crystal clear that between now and November 2012 we will be having a big ideological argument about what kind of country this is and what sort of future we want – an argument that we've largely avoided for two generations.

When I say "we" have largely avoided them, what I actually mean is that one side has avoided it. Conservatives since Ronald Reagan have argued relentlessly that liberal philosophy is destroying the country. Liberals have not, as a rule, taken on conservative philosophy. They have tended meekly to venture things like: gee, those guys are going a little overboard, don't you think? Bill Clinton, who did more defending of progressive governance than most people give him credit for, was nevertheless the Democratic president who said the "era of big government is over", which meant that the Democrats would launch their insurrections on the terrain of particular policy criticisms, not broad world-view. It was easier that way because the Democrats could speak up for certain specific functions of government without having to explain how they saw the world.

Now, though, the issue is forced. The deficit-reduction plan on offer from Republican congressman Paul Ryan, the chairman of the House budget committee, means that the fight can be put off no longer. The Ryan plan is such a direct assault on the liberal state constructed over the last 70 years – with the support of both parties – that the Democrats have to draw a Maginot line in the forest, as it were, and arm themselves to defend that state and way of life.

The central issue here is Medicare – a sort of American NHS for old people. Medicare was passed in 1965, under a Democratic president (Lyndon Johnson), with the support of strong Democratic majorities in Congress – and, incidentally, just shy of half of all Republicans, back when the GOP had a strong moderate faction.

How does Medicare work? As with any massive scheme it's impossibly complicated, and rife with fraud, overbilling and too many rules. But from the perspective of the individual it's pretty simple. If you are over 65 and need healthcare, generally speaking you get it. You make co-payments, but they're manageable for most people. In 2009, Medicare spent $509bn serving 46.3 million Americans. It is administered with reasonable efficiency, considering that, unlike private insurers, it can't throw anyone off the rolls.

Who pays for it? Every rootin'-tootin' one of us, through good old-fashioned taxes: a payroll scheme by which both employee and employer contribute 1.45% of the employee's wages (up to $107,000) into the Medicare trust fund. The fund, says Medicare's board of trustees, is solvent until 2029. It is the very definition of single-payer healthcare.

And guess what? Americans like it. Beneficiaries love it. Even Republicans. It works so well under normal circumstances that many people can't believe it's run by the government, and the old joke about the little old lady telling her congressman – "Keep the government's hands off my Medicare!" – gets a lot of mileage. Bottom line: it's a government service with millions of satisfied customers.

Enter the Ryan plan. Without getting too deep in the weeds, it would replace what we call "fee for service" coverage with a cash grant to seniors. They can spend it on healthcare, or not. Sounds like freedom, if you believe the GOP spin. But what happens when your healthcare needs exceed the size of the grant? Dramatically exceed the size of the grant, as will happen often in the case of elderly people who need lots of care? The Congressional budget office estimated recently that by 2030 the average senior would go from paying 25% for his healthcare to paying a whopping 68%.

Here is where the Democrats (led of course by Barack Obama, but I mean all of them – from the coastal chardonnay-swilling liberals to the callused dustbowl centrists) have to stand firm. And here is where they must defend Medicare on philosophical grounds. Their first instinct will be to scare old people with stories of the cuts that would happen under Ryan. That will work to some extent, maybe a big extent. That 68% figure is scary to a lot of people, presumably, so it should get quite a workout.

But they need to go bigger. If this is just another debate about how much to cut, it will be a debate conducted on Republican terms, and in a sense the Republicans will win no matter how large or small the cuts are. Democrats must say: no, this is not merely about technicalities about Medicare's solvency. This is about what sort of country we are. Obama, to nearly every observer's utter astonishment, did that pretty aggressively in his 13 April budget address. His fellow Democrats had better pick up on it. It's the only way to change the dynamic of the debate over the long term.

You may have chuckled at my earlier invocation of the Maginot line, but it was intentional. It's not that the Maginot line didn't work. It's just that the Wehrmacht went around it. The Democrats, unlike the French, must extend their cordon to the sea and then push the Republicans back. Medicare is that important.