If you’ve been paying attention this past decade, it won’t surprise you to learn that the country’s policy elites are in the midst of a destructive, well-nigh unhinged discussion about the future of the nation. But even by the degraded standards of the Washington establishment, the growing panic over government debt is shocking.

First, the facts. Nearly the entire deficit for this year and those projected into the near and medium terms are the result of three things: the ongoing wars in Afghanistan and Iraq, the Bush tax cuts and the recession. The solution to our fiscal situation is: end the wars, allow the tax cuts to expire and restore robust growth. Our long-term structural deficits will require us to control healthcare inflation the way countries with single-payer systems do.

But right now we face a joblessness crisis that threatens to pitch us into a long, ugly period of low growth, the kind of lost decade that will cause tremendous misery, degrade the nation’s human capital, undermine an entire cohort of young workers for years and blow a hole in the government’s bank sheet. The best chance we have to stave off this scenario is more government spending to nurse the economy back to health. The economy may be alive, but that doesn’t mean it’s healthy. There’s a reason you keep taking antibiotics even after you start to feel better.

And yet: the drumbeat of deficit hysterics thumping in self-righteous panic grows louder by the day. Judging by its schedule and online video, this year’s Aspen Ideas Festival was an open-air orgy of anti-deficit moaning. The festival is a good window into elite preoccupations, and that its opening forum featured ominous warnings of future bankruptcy from Niall Ferguson, Mort Zuckerman and David Gergen does not bode well. Nor does the fact that there was a panel called "America’s Looming Fiscal Emergency: How to Balance the Books." This attitude isn’t confined to pundits. The heads of Obama’s fiscal commission have called projected deficits a "cancer."

The hysteria has reached such a pitch that Republican senators (joined by Nebraska Democrat Ben Nelson) have filibustered an extension of unemployment benefits because it was not offset by spending cuts. Keep in mind, the cost of the extension for people unlucky enough to be caught in the jaws of the worst recession in thirty years is $35 billion. The bill would increase the debt by less than 0.3 percent.

This all seems eerily familiar. The conversation—if it can be called that—about deficits recalls the national conversation about war in the run-up to the invasion of Iraq. From one day to the next, what was once accepted by the establishment as tolerable—Saddam Hussein—became intolerable, a crisis of such pressing urgency that "serious people" were required to present their ideas about how to deal with it. Once the burden of proof shifted from those who favored war to those who opposed it, the argument was lost.

We are poised on the same tipping point with regard to the debt. Amid official unemployment of 9.5 percent and a global contraction, we shouldn’t even be talking about deficits in the short run. Yet these days, entrance into the club of the "serious" requires not a plan for reducing unemployment but a plan to do battle with the invisible and as yet unmaterialized international bond traders preparing an attack on the dollar.

Perhaps the most egregious aspect of the selling of the Iraq War was its false pretext. It never really was about weapons of mass destruction, as Paul Wolfowitz admitted. WMDs were just "what everyone could agree on." So it is with deficits. Conservatives and their neoliberal allies don’t really care about deficits; they care about austerity—about gutting the welfare state and redistributing wealth upward. That’s the objective. Deficits are just what they can all agree on, the WMDs of this manufactured crisis. Senator John Kyl of Arizona, speaking on Fox, has come out and admitted as much. All new spending increases must be offset, he said, but "you should never have to offset the cost of a deliberate decision to reduce tax rates on Americans." So there you have it.

Remember that the Iraq War might have been prevented had more Congressional Democrats stood up to oppose it. Instead, many of those who privately knew the entire enterprise was a colossal disaster in the making buckled to right-wing pressure and pundit hawks and voted for it. That mistake is being repeated. Despite White House economists’ full realization of the need for stimulus in the face of astronomically high unemployment, the New York Times has reported that the political minds inside the White House, David Axelrod and Rahm Emanuel, have decided that the public has no appetite for increased spending. "It’s my job to report what the public mood is," Axelrod explained. He then showed up on ABC’s This Week to wave the white flag, saying that the president would continue to press to extend unemployment benefits; conspicuously omitted was any mention of aid to state governments, which had originally been included in the president’s June letter to Congress asking for a new stimulus package.

There is hope, however: the public is nowhere near as obsessed with the deficit as are those in Washington. According to a USA Today/Gallup poll, 60 percent of Americans support "additional government spending to create jobs and stimulate the economy," with 38 percent opposed. A Hart Research Associates poll published in June showed that two-thirds of Americans favor continuing unemployment benefits. There is also very little public appetite for "entitlement reform," a k a cutting Social Security.

The lesson of the Iraq War is that over the long haul, good politics and good policy can’t be separated. If the White House is tempted to support bad policy in the short term because it seems less risky politically, it should give John Kerry a call and ask him how that worked out for him with Iraq.