Today, terror. Tomorrow, Budget. Will Gordon ride to Tony's rescue?

Hot news from the badge-making industry. Early orders are coming in for "Don't blame me, I didn't vote Labour" lapel buttons, T-shirts and bumper stickers. All right, I made it up. But it will happen. And the great paradox, the overarching irony of late Blairism, is that it will be precisely the same people wearing the badges as once wore "Don't blame me, I voted Labour" with truculent pride. Or at least, because 1992 was quite a long time ago now, precisely the same kind of people.

Politics today is strikingly reminiscent, for those familiar with the Rupert Bear oeuvre, of the story of Mirror Land, when the hero steps through a looking-glass into a place that looks like Nutwood but where everything is inverted and he is addressed as Trepur.

The gradual transformation of Tony Blair into a version of Margaret Thatcher has been commented on before, but last week was its fullest expression. The Conservative Party's attempts, he said, to water down the Prevention of Terrorism Bill - which he was advised was necessary - were "wrong, irresponsible and should stop". Of course, the delivery was not pure Thatcher. Blair has a wider range of personae than she ever had. As my excellent colleague Alan Watkins observes on the opposite page, the Prime Minister sounded petulant and even on occasion hysterical, as his predecessor was often accused of being. But he also did sweet reasonableness: "I hope the Conservative Party will reconsider", blink, blink. He even did it-hurts-me-as-much-as-it-hurts-you apologetic: "I'm sorry to keep landing this on them" - the Tories - his only concern was to protect the British people from a Madrid-style attack. But the underlying condescension, and the ignoble implication that one's opponents are soft on national security, was absolutely the Iron Lady's.

Once upon a time the government had an annual ritual by which it embarrassed the opposition and retained its grip on power. The ritual was called the renewal of the emergency provisions of the Prevention of Terrorism Act, which allowed the police to detain suspects for seven days without charge. It was largely symbolic legislation, passed in response to the IRA bombing campaign of the early 1970s, that was rarely used. But every year, the Conservative government renewed it and taunted the Labour opposition for voting against it. Until a young barrister became leader of the Labour Party and in 1996 instructed his power-hungry troops to abstain.

Nearly a decade later, the reversal is complete. Now, the police can detain people for 14 days without charge. And the new Prevention of Terrorism Act may be a better law than the Anti-Terrorism, Security and Crime Act that was ruled unlawful by the Law Lords in December. But last week its passage was used to try to embarrass the Opposition. What was surprising about the episode was that the Conservatives - as well as the Liberal Democrats - chose to go to the "left" of the Government. There was an element of playing games on the Conservative side, too, it might be noted. The unexpected - and unexpectedly plausible - defence of civil liberties by David Davis, the shadow Home Secretary, probably had as much to do with the next Tory leadership contest as with the fight with Labour.

But it was Blair's games-playing that was notably and offensively Thatcherian. Once, 12 years ago, in the 1993 debate on the Prevention of Terrorism Act, he was accused - by Kenneth Clarke, another born-again civil libertarian - of wanting to let terrorists "melt into the population like snow off a ditch". Last week, Blair and Charles Clarke unworthily accused the Tories of wanting to allow terrorists to "slip away".

This week, the caravan moves on, towards the Budget on Wednesday. Yet still we are in Mirror Land. Gordon Brown's performance will be as coloured by the imminent election as last week's Palace of Westminster ping-pong tournament. What this week's Budget most resembles is that of 1992, when a Conservative government was fending off a Labour opposition that had made some recent progress towards electability. Then, the Tories costed Labour's spending increases at £35bn a year. Now, Labour has costed Tory spending cuts at £35bn a year. Both figures are misleading, although the current one is less so. It does at least derive from Tory plans, which suggest that if the growth of public spending is restrained, the total will be £35bn lower than it would be under Labour - in seven years' time.

Then, John Smith offered a tax cut for the low-paid that was trumped by Norman Lamont in the pre-election Budget. Now, Oliver Letwin offers a £4bn tax cut, although he has learnt part of the lesson from the past and is waiting until he sees the whites of the electorate's eyes before deciding which tax to cut.

But Brown will trump him anyway. The bookmakers are taking bets on how many times he will use the word prudence or prudent (the money is on two and a half), and how many sips of water he will take (one), but the one certainty is that he will give back - to pensioners or "hard-working families" or both - a little more than £4bn.

The recent rush of tax receipts means that he is ideally placed to deliver for Labour the election-winning clincher, while sticking to his prudent golden rule. Once again, he has proved the upmarket end of the bookmaking industry, known as City forecasters, wrong. The black hole that was opening up in next year's accounts has mysteriously closed again.

In Mirror Land, Labour is trusted on national security and trusted to run the economy - the parties have changed places since the Thatcher years. But this is not a simple case of looking from pig to man and from man to pig, and from pig to man again, and finding it impossible to say which is which. That is the implication of so much of the criticism of Blair over terrorism legislation, and the impulse behind the "don't blame me" badge-wearing.

Brown's Budget should be the answer to such fashionable pseudo-left-wing pessimism. It should draw attention to the fact that the gap between rich and poor is no longer growing wider, which it would be under the Tories. It should make again the case for maintaining the present level of public spending as a proportion of national income, rather than cutting it. And it will be a chance, again, to expose the unfairness and confusion of Conservative policy on the central public services of health and education.

Blair may sometimes sound uncomfortably like Thatcher, but he is joint author with Brown of the New Labour revolution - it was Blair after all who "stole" Brown's 2000 Budget by promising to bring health spending up to the European Union average. This is Mirror Land with a twist.