There is a belief among some economists that because of America’s unique status as the world’s largest single economy and only military superpower that it is immune to the laws of economics. There is a belief in Washington and in the big media that deficits don’t matter. Is it true? Can politicians continue the record deficit spending spree without critically damaging the economy?

According to McClatchy Newspapers columnist Jack Chang, the record government deficits shouldn’t be a problem. He says economists agree that the government can keep spending at the current pace for “a lot longer.” Investors will keep lending to the United States even though interest rates on many bonds and bills yield close to zero percent because they just don’t have any other good options. Foreign governments will keep purchasing treasuries because America is too big to fail.

McClatchy is deluding itself. Economists are a dime a dozen—you can find someone to support just about any position you want. Current events prove that the majority of economists are not very good. If the majority were really any good, they should have seen the looming housing bubble years ago. If the majority were so smart, they would have been able to warn of the worst economic meltdown since the 1930s. And if the majority really knew what they were talking about, then how come the smartest analysts in the world at Bear Stearns, Merrill Lynch, Goldman Sachs, Morgan Stanley, Lehman Brothers, aig, Citigroup and many other financial institutions are now out of work or would be out of work had taxpayers not come to the rescue?

Yet today, in the midst of a slumping economy that is, if truth be known, probably shedding jobs at closer to 700,000 per month as opposed to the reported 535,000, big media analysts continue the “it’s all going to be okay, the government will save us” mantra. Do they not realize that America’s financial experts—the ones that are supposed to be our saviors—come from the same failed institutions that taxpayers are now saving? Treasury Secretary Hank Paulson is the former ceo of Goldman Sachs. Robert Rubin, economic adviser to Barack Obama, used to be ceo of Citigroup.

The truth is, most economists either don’t have a clue about what is about to hit America, or they are willingly blind. America has been on the top of the hill so long, it is almost unfathomable to them that America is already rolling down the back side.

The scale of the proposed bailouts and economic stimulus plans in and of itself clearly illustrates the terrible condition of the economy.

But first, it is important to realize that the government was already technically insolvent before it announced its massive spending plans. If you don’t believe that, ask David Walker, the former comptroller of the United States. He has been warning America for years about what some call the “dirty little secret everyone in Washington knows” but no one wants to face.

Insolvency doesn’t necessarily mean bankruptcy. In America’s case, it just means that when you add up the national debt, promises for Medicare, Medicaid and Social Security, America’s liabilities far exceed its assets. As long as America can keep up with the interest payments and keep finding lenders to allow it to roll over its debt, it can avoid bankruptcy.

But going forward, America is going to face extreme pressure on both fronts. America is walking a fine line, and as America’s investment banks found out, insolvency can lead to a quick collapse.

Already, interest payments on Medicare, Medicade and Social Security liabilities take up 42 percent of America’s budget.

Then there is the ballooning national debt. The total national debt incurred from 1836 to the present is approximately $10.6 trillion. And now, with all the announced emergency spending plans, which will cost around $2 trillion, the government plans to add almost 20 percent to the debt burden. In just one year.

Two trillion is an outrageous amount of money. The Marshall Plan that paid for the reconstruction of Europe after World War ii only cost $115 billion, after adjusting for inflation. The Louisiana Purchase cost about $217 billion, while the Korean War cost a comparatively paltry $454 billion. The Vietnam and Iraq wars together cost less than $1.3 trillion. Only the cost of the Second World War exceeds the bailouts announced over the past few months.

As a percentage of gross domestic product, next year’s budget deficit is expected to be the worst in the history of the U.S.

But the worst-case budget projection has the potential to be catastrophic. The government has also committed taxpayers to guarantee multiple trillions of dollars of Fannie Mae, Freddie Mac, aig and other agency debt. The government has also promised to guarantee all bank deposits within the U.S. up to $250,000 per account. So if the housing market continues to deteriorate, and the economy continues to slow, taxpayers may be in for a bigger bill than anyone has imagined.

And if that isn’t enough of a worry, Mr. Walker reports that the amount of money America needs stashed away earning interest to cover the government’s Social Security, Medicare and Medicaid promises is a shocking $50 trillion. As the 80 million baby boomers age, they will begin paying less tax and begin increasing withdrawals. The budget deficit will shoot up like a rocket.

Instead of lulling people into a false sense of security, economists should be warning that America’s profligate spending is going to wreck the nation’s finances. And eventually that will mean a falling dollar, much higher interest rates, and a greatly reduced standard of living for America.