One of the great political lessons in New York has been what we call the Giuliani inversion. When the future mayor was United States attorney for the Southern District here, he committed what many considered outrageous abuses in cases such as Princeton Newport, Michael Milken, Marc Rich, and others. Mr. Giuliani used the Racketeer Influenced and Corrupt Organizations Act for purposes it wasn’t intended. He showboated. He abused his office as prosecutor, many of us felt, to prep the ground for his political career, only without the charm of, say, Thomas Dewey. The inversion came when he got elected mayor. Suddenly all his vices started to look like virtues as he battled – successfully — to prove that New York was, in fact, a governable city. And many of his critics became his cheerleaders and are among his cheerleaders today.

That’s a lesson we’ve been bearing in mind as we watch Governor Spitzer settle into Albany. This newspaper was no great fan of Mr. Spitzer’s tenure as the state’s attorney general for the kinds of concerns, though the particulars were different, that so many had with Mr. Giuliani in his years as prosecutor. But, save for Governor Spitzer’s early brush with the Legislature over the question of the comptroller, we are starting to admire greatly his efforts to confront the fiscal problems in Albany. Certainly he has turned the tables on Senator Bruno and the state Republicans, who are now the scandalously big spenders, as our Jacob Gershman pointed out in a wonderful column Monday, which was echoed by William Hammond in the Daily News yesterday.

The governor himself, in an interview with Mr. Gershman on Monday, spoke of a possible compromise on at least some of his key budget demands. He said he would consider restoring a portion of the $1 billion in Medicaid cuts that have been the target of an attack campaign waged by the hospital industry. He also said he wouldn’t rule out scaling back his proposal to expand the number of charter schools in the state. “You can’t enter any conversation with this many variables in any budget where you say if it isn’t this, take a hike,” Mr. Spitzer said. “There has to be some give and take on both sides, but we began at a point that we think is right.” With a deadline of April 1 approaching, Mr. Gershman reported, “Mr. Spitzer risks having his first year marred by a late budget by refusing to negotiate with lawmakers.”

Our purpose here isn’t to quarrel with Mr. Spitzer as a tactician. But by our lights the issue of whether the budget is on time is less important than whether it is the right budget. The issue of charters is certainly not one we would give away for an on-time budget, and neither is the $1 billion in Medicaid savings. The question of the comptroller was muddied by overstepping, but the governor is not anywhere near overstepping in his bid to raise the charter cap or slow the growth in Medicaid outlays. On the contrary, he is right as rain. And this is where the fight he has been lusting for will be joined. If it turns out that Mr. Spitzer has to roll over the Republican controlled Senate in order to get spending under control, it would be cheap at the price. The Republicans are not going to get defended for abandoning Republican principles. The Spitzer inversion wouldn’t be the first to light up this town.