The Bush Don't Worry-Be Happy economic plan is killing us

The New York Times’ Paul Krugman and The Washington Posts’ David Broder have provided us with more evidence of how the current administration’s economic policies are hurting Americans.

Broder notes that the Bushies mania for tax cutting and invading countries is draining money away from states and cities. (Read that as the Bushies draining money away from you.) Krugman talks about the general state of the economy and the Bushies state of denial.

Broder on “Military spending shifts burden to states”:

There’s been a lot of attention given — and properly so — to the way Uncle Sam has commandeered National Guard troops from the states for service in Iraq and Afghanistan. But an examination of budget trends shows that Washington has been just as effective in siphoning money from the states and cities to help finance our military obligations.

Paul Krugman on “Debt and Denial:”

Denial takes a more systematic form within the federal government, where Dick Cheney is doing to budget analysis what he did to intelligence on Iraq. Last week Mr. Cheney announced that a newly created division within the Treasury Department would show that tax cuts increase, not reduce, federal revenue. That's the Bush-Cheney way: decide on your conclusions first, then demand that analysts produce evidence supporting those conclusions.…

But serious analysts know that America's borrowing binge is unsustainable. Sooner or later the trade deficit will have to come down, the housing boom will have to end, and both American consumers and the U.S. government will have to start living within their means.

Housing is so overvalued on the coasts, that people are lulled into thinking that they are house rich, Krugman writes. But that “wealth” is an illusion that may well vanish very soon.

So it seems all too likely that America's borrowing binge will end with a bang, not a whimper, that spending will suddenly drop off as both the bond market and the housing market experience rude awakenings. If that happens, the economic consequences will be ugly.