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Ostensibly there was a vast chasm between the economic policies of George W. Bush, the Republican, and John. F. Kerry, the Democrat; between the Texas cowboy who spurred his troops into Iraq, squandering uncounted billions, and the Boston liberal.

Bush promised to continue on track if reelected. He said he would expand tax cuts, including corporate and dividend tax, for an unlimited time. He promised to reform social security and to allow workers manage their own retirement plans.

Kerry promised to lower taxes in order to stimulate investment in technology, but he opposed tax cuts for households earning more than $200,000 a year. Under his program, the budget deficit would be halved by the end of his first term.

Kerry said he would expand health insurance coverage to tens of millions of Americans worker who have none. One key difference between the two candidates is the practice of outsourcing jobs outside America.

But the truth is that regardless of the winner, which this time around was Bush, there's a loser in this election - America's economy. Its situation looks increasingly worrying.

Bush will begin with one of the biggest federal deficits in history. Bill Clinton left balanced books behind him, and in his first term, Bush inflated the deficit to $450 billion. Yes, almost half a trillion dollars.

Bush is getting a public debt that ballooned to a gargantuan $7.5 trillion in October. Most of that is being financed by foreigners.

Bush is facing legislative initiatives that will inflate social security and healthcare spending massively, by about a trillion dollars over 10 years.

The illusion of wealth

Bush is inheriting an economy driven mainly by private consumption, which is driven mainly by households running up credit bills and by a real estate bubble, all of which are creating the illusion of wealth.

Rising property prices enable millions of Americans to take out second mortgages, whether to invest in more property or to spend on a boat and popcorn. But the increase in real estate prices isn't real wealth, it's merely a redistribution between people who have property and the ones who don't.

Two years ago pundits, were warning that the U.S. economy was over-extended. Two years ago, experts were warning of the dangers as Bush stimulated the economy through expansionary policy, recreating hundreds of thousands of jobs that had vanished when Wall Street collapsed.

It may have worked for a year or two, but it isn't likely to work down the line. Bush and Fed chairman Alan Greenspan poured trillions into the economy, expanding the deficit at bottom-crawling interest rates. It worked. The economy boomed. But that policy has exhausted itself.

Higher interest rates

Now Greenspan is slowly raising interest rates to prevent an inflationary outbreak. Before the elections, both Bush and Kerry vowed to reduce government spending and the federal deficit.

But the economy will be paying the price of reliance on cheap money and loans, for years to come. The diet will be a hard one. The national debt, the social security deficits, and consumer credit amount to trillions that, if growth is truncated, will weigh down like megatons of bricks.

In the last decade, the American economy has demonstrated tremendous power, efficiency and productivity. But the challenges it faces seem particularly enormous.