One of the most famous scenes in all of movie history is when Dorothy and her three companions stand before the Wizard of Oz. As the travelers beg for help, the gaseous phantasm explodes, "Silence! I know what you want. I am Oz!" The four innocents are cowed into submission.

It is Toto who saves the day, scampering across the floor and pulling back the curtain. The "wizard" lamely tries to salvage his scam, bellowing, "Pay no attention to that man behind the curtain!" They do, of course, and the fraud is exposed for what it is.

President Bush is playing "wizard" with the nation's economy. He says he hopes the November election will be about the economy but it is bluster, the economic equivalent of "Mission Accomplished." What he really doesn't want is for anybody to look behind the curtain. For, when they do, they find enormous problems lurking.

In five areas in particular - budget deficits, trade deficits, unfunded liabilities, oil, and China - the president's policies have damaged the economy, in some cases grievously. Unless they are reversed, the nation's economic future is in peril.

The first and most obvious problem is the federal budget deficit. President Bush inherited a record budget surplus from Bill Clinton but turned it immediately into a deficit. In only five years, he has added over $3 trillion to the national debt.

When Bush took office, the national debt, accumulated since the founding of the nation, stood at $5.6 trillion. Today it approaches $9 trillion. By the time Bush leaves office, it will exceed $11 trillion. In only eight years, he will have created more debt than all other U.S. presidents combined.

Any thug who extorts a $3 trillion loan from the next generation and spends it today can fake the illusion of prosperity, pretending to be a "wizard," at least for a while. But what happens when the bills come due?

Our children will pay a very heavy price for Bush's credit card-based wizard routine. To pay off Bush's debts, they will have to take money out of their own pockets. They will have to lower investment in their own economy. Their standards of living - and those of their children - will be irretrievably worse.

A similar but even greater problem lurks with the trade deficit. In 2000, Clinton's last year in office, the trade deficit stood at $377 billion. This year, the number will exceed $800 billion, more than double what is was only six years ago. And it is still growing rapidly.

That is $800 billion more a year that the U.S. buys from foreigners than it sells to them. To support Bush's record budget and trade deficits, the U.S. must borrow almost $3 billion every day, most of it from foreigners. Indeed, president Bush has borrowed more money from foreigners than all previous presidents combined. Not since before the Civil War has the U.S. been so dependent on financing from abroad.

But, foreigners don't loan such funds out of the goodness of their hearts. They demand collateral in the form of U.S. treasury bonds. These bonds, "backed by the full faith and credit of the U.S. government," are effectively American money. Foreigners have begun using this money to buy up the choicest of U.S. assets.

The convenience store chain Seven-Eleven is now owned by the Japanese. IBM's personal computer business is owned by the Chinese. Zenith, an icon of American electronics, is owned by the Koreans. Frigidaire is owned by the Swedes.

Virtually the entire American movie industry - Twentieth Century Fox, Universal Pictures, Columbia Pictures, and MGM-is now owned by foreigners. RCA - the Radio Corporation of America(!) - is owned by the French. Bell Labs, the legacy of Alexander Graham Bell, one of the true greats in the pantheon of American innovation - is also now owned by the French.

Chrysler is owned by the Germans. TransAmerica(!) Corporation, one of the largest insurance companies in the world, is owned by the Dutch. Ralston Purina is owned by the Swiss. Amoco - the American(!) Oil Company - is owned by the British. The list goes on and on and grows every day.

Americans must understand that this is how Bush's mammoth debts get settled: with foreigners cashing in their I.O.U.s in exchange for the most productive of American assets. More than 20% of all "Amercian" assets are now owned by foreigners, with the profits, technology, copyrights, patents, and high value jobs being sent out of the country to build up other nations' economies.

American workers, meanwhile, are becoming sharecroppers in their own country, a country that is rapidly being denuded of its most productive assets. And since this isn't the movies, there will be no nice little man to bumble out from behind the curtain, offer up his gee-shucks routine, and magically make everything right.

Beyond the national debt and the trade deficit, are the government's "unfunded liabilities," debts it has committed to pay but for which there is no identified source of funding. Most of these debts come from Social Security and Medicare.

When Paul O'Neil took over as Bush's first Treasury Secretary in 2001, he commissioned a study to find out just how large these liabilities were. The answer: $44 trillion. O'Neil was promptly fired, some believe for even daring to raise the question.

More recently, economist Lawrence Kotlikoff, writing for the Federal Reserve Bank of St. Louis, cited a figure of $65 trillion for these debts, an increase of $21 trillion or almost 50% in only four years. Such a sum simply defies comprehension, even imagination. It exceeds the GDP of the entire planet. It is larger than the net worth of all assets still owned by Americans.

Kotlikoff, hardly a radical, goes so far as to suggest that the U.S. is actuarially bankrupt, that the obligations it has committed to pay exceed its capacity to pay in any reasonable scenario. In other words, these debts can never, will never, be paid.

The government will renege on its commitments to the Baby Boomers and even more surely, on its obligations to the Boomers' children. The damage to the credibility of the U.S. government and to the nation's social capital will be incalculable.

These problems of exploding debts - budget deficits, trade deficits, and unfunded liabilities - lurk and grow, like icebergs beneath the surface of a seemingly calm economic sea. Indeed, they are what make the short-term illusion of prosperity possible, as borrowing always does.

But even more surely, they imperil the nation's long-term economic health. That's why Bush never talks about how the economy is made up to look good. He only wants you to see what's in front of the curtain, not what's behind it. There is exactly as much wizardry in Bush's economic stewardship as there was in the "Wizard's" magic. Which is to say, none. It entirely a con game, a fraud perpetrated on the credulity of trusting citizens.

Beyond debts, there's the even more serious problem of oil. The U.S. became the world's leading economy partly as a result of its mastery over oil. The entire design of the U.S. economy - from the size of its cars, the expanse of its highways, to the very fact of suburbia - is an artifact of cheap, plentiful oil. And for 100 years, it worked.

But oil is a once-in-the-history-of-the-planet endowment. As it runs out, the U.S. is strapped with the most energy in-efficient economy in the world. Its economic vitality goes down in precise measure of the extent to which the price of oil goes up. Look, for example, at the plight of the automobile industry, once the flagship of U.S. economic might.

Ford just announced a staggering $5.8 billion loss for the third quarter. It has given severance packages to 45,000 workers. General Motors is closing 15 plants and publicly denies it is considering bankruptcy, even as it discusses merger plans with Nissan and Renault. Delphi Automotive, the largest auto parts manufacturer in the world, is already in bankruptcy and forcing 60% pay cuts on its workers.

Bush's wars in the Middle East have raised oil prices to four times what they were when he took office, instantly rendering obsolete a vast portion of the nation's capital stock. You might expect that if the nation's foreign policy was going to raise the price of oil that much, its domestic policies might at least mitigate some of the damaging impacts on the economic system. They do not.

If the U.S. is to ever to pay off even some of the debts mentioned above and revive its economic might, it needs to quickly, radically redesign its economic infrastructure so that it can compete with the economies of Europe and Asia that never had any oil and that, as a result, are so much more energy efficient. But we're not doing that.

Under Bush, with real median incomes declining, the nation's savings rate has fallen below zero, the first time since the Great Depression. This means that there is no capital to carry out such a retrofit, even if the vision, desire, and leadership were there. What capital does come into the country from abroad, to fund Bush's debts, is immediately sluiced away into tax cuts for millionaires, interest payments on the debt, and spending on the military.

Fifty-two percent of Bush's $1.6 trillion tax cuts went to the top 1% of income earners, Bush's "base" as he calls them. Presumably they need the money to keep funding Republican election campaigns. Interest payments on the debt approach $400 billion a year, much of that going out of the country. And the military consumes well over half a trillion dollars a year, more than all the rest of the world combined.

None of that money does anything to rebuild the nation's aging infrastructure or make the economy more competitive. Rather, it does the exact opposite. It steals capital from energy reconfiguration, raises interest rates making new investments less profitable, and consigns the economy to an irreversible downward spiral of inefficiency, uncompetitiveness, and certain obsolescence.

Finally, there is the problem of China. The U.S. won the Cold War against communism but is rapidly losing the "Cold Peace." When China entered the global market system it brought 1.3 billion people with it. Chinese workers earn an average of $.57 per hour, low enough to make it profitable for American companies to move all of their production jobs to China. That's where 3 million manufacturing jobs, all lost under Bush, went and they are not coming back. Unless Americans are willing to work for Chinese wages.

Alan Blinder, a Princeton economist and former Vice Chairman of the Federal Reserve Board, has estimated that as many as 56 million American jobs might be susceptible to such outsourcing. As with Bush's debts, such numbers simply defy imagination.

Fifty-six million is over 40% of all the jobs in the U.S. economy, and the best jobs at that. It would represent 10 times more unemployment than currently exists, half again as much unemployment as was reached during the deepest depths of the Great Depression. It would amount to the evisceration of American workers and the complete destruction of American living standards.

But Bush's economic policies only accelerate this trend. His massive debts have required the Federal Reserve Board to raise interest rates 17 times since 2004 in order to attract the capital needed to fund the debts. But the high interest rates keep the value of the dollar high, especially compared to the Chinese yuan. This makes Chinese products and Chinese workers all the cheaper when compared with American alternatives.

The Chinese, meanwhile, laugh in Bush's face every time he sends a treasury secretary to Beijing to try to negotiate a stronger yuan. The Chinese, who save 40% of their GDP, loan the U.S. over $200 billion a year, $200 billion that is promptly recycled into purchases of Chinese products and that keeps Chinese factories humming.

And don't forget, after the money is spent, they still have that I.O. U., that claim on $200 billion of American assets. Every year. Why would they change? Their economy booms while ours is bled. Their stock of productive assets grows while ours is depleted.

But you can't blame the Chinese. They are simply making the best of a good situation. It is the U.S.'s insatiable demand for debt, led by Bush's budget deficits, that causes it to so foolishly, shortsightedly surrender its economic sovereignty. It is the creditor, not the debtor, who calls the tune. The U.S. is the debtor and until that changes, it has no leverage over China, even as its own economy is being wrecked.

American prosperity is owed not only to a brilliant design for a government and generations of hard work, but also to an amazing run of good luck. We inherited an entire continent of virgin land - an inconceivable bonanza - at precisely the moment that the industrial revolution made it possible to exploit such expanses.

Then, in World War I, Europe, our only economic competitor, blew its brains out and repeated the act 20 years later, with the Japanese joining in. That left the U.S. astride the globe with the only intact economy on earth. We were generating 62% of the entire planet's GDP. And we have riden that horse ever since.

But the measure of leadership is not how well it leads when times are good. It is how it leads through adversity, when times are bad. That is why we revere Washington, Lincoln and Roosevelt as we do. Today America faces some of the biggest economic challenges it has ever faced and the benign wind of serendipity is no longer at our backs.

Budget deficits. Trade deficits. Unfunded liabilities. Oil. And China. In all of these arenas, Bush's leadership has failed, badly, even catastrophically. His policies make each of these problems dramatically worse. They effectively amount to an abandonment of the U.S. economy and a milking of its assets and wealth into the hands of a very small group of the world's richest people. Like the Bush family.

His shtick about pretending the economy is good is nothing so much as bluster, like the gaseous effusions of the "wizard" in the movie. There is no substance and no reality behind it. It is a con game for the credulous. His real adjuration is to pay no attention to the problems behind the curtain. But draw it back we must, just as we drew it back on his lies concerning Iraq.

Bush's failed Iraq War will end soon, though its odious legacy will linger. But the harm wrought by Bush's failed and self-serving economic policies will plague the country for decades. If they are not reversed, and soon, they will inflict grave, irreparable damage on the U.S. economy. Unfortunately, there are no ruby slippers to send us back home. There is no dream to wake up from. No Aunty Em waiting. This isn't the movies. It's reality. We're not in Kansas any more, Toto.

Robert Freeman writes on economics, history and education. He can reached at robertfreeman10@yahoo.com.