School taxes are soaring, but schools are losing funding. States are going bankrupt and teachers are being threatened with mass layoffs. Property taxes are high, but property values are falling, and banks won't refinance and won't make new loans. The federal government is working to foster economic recovery through targeted investment, lending and community-building projects. But states are dealing with the budget crisis by hiking property taxes and shifting more responsibility to municipalities.

That transition in the manner and nature of funding for state and local government services is being brought about by an economic crisis rooted not only in the mischief of ill-advised financial sector derivatives trading, but also by the extreme impact the Iraq war has had on federal funding priorities. The hundreds of billions devoted year after year to funding the war in Iraq has been drained away from middle America, from programs that provide public services, funding to states, and school districts.

The missing money, poured into the black-hole of an Iraq war that has spawned more terrorist activity than any single undertaking in the history of the United States or the world, is money which would go toward education, healthcare, infrastructure, emergency preparedness and even homeland security. The result of an underfunded economy, with federal assistance to states drying up, has been disorder and the degradation of entire sectors of the economy.

It is due to these Iraq-induced shortfalls that citizens around country are finding state and local taxes becoming more intrusive and less conducive to flexibility in personal choices about life priorities. Foreclosures and other major personal-finance cut-backs are coming not just from irresponsible personal choices, but also from the still mounting stresses of a system that failed to establish fiscal responsibility, because its fiscal resources were drained away for a war in Iraq.

Even with large-scale troop withdrawal scheduled for a year from now, the Iraq war will continue to cost hundreds of billions of dollars this year and next, and much of that cost might wind up being shifted to Afghanistan, along with troops and equipment. That war is now entering its ninth year, making it the longest US war since Vietnam and the second longest our nation has ever fought.

Military strategists and Bush opponents are not alone in arguing that Afghanistan should not have been a decade-long quagmire, but that the war effort there suffered severely when the Bush administration ordered up a new war effort in Iraq, with no connection whatsoever to the attack of 11 September 2001, and began directing four to five times as many resources there as had been devoted to Afghanistan, despite never capturing Bin Laden or Mullah Omar.

It is now possible that by the end of Barack Obama's first term, the Afghanistan war could become the second of George W. Bush's trillion-dollar wars, a colossal and unnecessary waste of blood and treasure that will continue to eat away at the integrated circuitry of public services and federal funding, degrading quality of life at home with questionable benefit to US interests abroad, unless the Taliban threat to Pakistan is halted and al Qaeda significantly dismantled.

The Iraq war devastated the American war effort in Afghanistan, while federal tax policy took an irrational and dangerous turn toward reduced revenues in a time of war. In the meantime, economic and fiscal policy have spurred the collapse of the banking sector and an historic surge in energy prices, actually halting economic growth. The combined drain on federal resources is putting pressure on American states and municipalities to tax their way out of bankruptcy.

How is state or local bankruptcy linked to overseas wars? Because the federal government is not only funding those hugely expensive war efforts, it has also slashed taxes on the wealthiest Americans multiple times during the last decade. (This is part of why the wild success of the investment banks' profit recovery is not filtering down to the rest of the economy yet.)

The government is so strapped for cash, it is starving the states and municipalities of much-needed funding. The incidence of unfunded mandates —federal laws imposing costly change on states without providing funding to enable the changes— increased dramatically under the Republican-controlled Congress, between 2001 and 2006. No Child Left Behind was full of them, and even carried penalties that would reduce funding still further.

In fact, that law was so full of funding problems it wound up being a federal case in which school principals were suing the federal government. The executive director of the NASSP has said:

The unfunded mandates of NCLB have seriously strained America’s public schools. The federal government’s refusal to fully fund NCLB has forced schools to pull resources from other areas, and as a result has reduced the funds available for programs such as music, art, and foreign language.

There are anti-tax radicals in the Republican party who have famously declared their intention to use public policy to "shrink the federal government until it can be drowned in a bathtub", which leads some to speculate whether the coordinated assault on social service funding brought by the two trillion-dollar wars, the massive tax cuts, the huge number of new unfunded mandates and financial regulatory changes that led directly to the record multi-trillion-dollar bailouts, was really a coordinated assault on social services and the federal budget.

That is a story for another day. For now, we're grappling with the aftermath of these devastating policy choices. And the key factor in the whole picture is the war in Iraq. Yes, Saddam Hussein was deposed, but we have a country that may remain for generations on the verge of all-out civil war, and no other event in modern American history has been more devastating to our national finances or economic outlook.

The most famous book written to date about the war in Iraq was titled Fiasco, because aside from "regime change", not one of the stated goals of the Iraq war planners was achieved. The men and women of the US armed forces have performed valiantly and professionally, with a few very visible exceptions, and have succeeded in stabilizing Iraq, so it won't break apart.

Iraq may not only hold together, but US military efforts in rebuilding infrastructure and working with communities and tribes to foster cooperation and a new spirit of civic engagement, collaboration with police and local government, and a reduction in insurgency, have been vital in moving Iraq toward peace. The men and women doing that work deserve credit for such monumentally difficult tasks, it must be noted.

But catastrophically damaging ripple effects from the invasion itself and the clumsy, extreme violence of the early years of the war, have increased the threat to US security, proliferated the number of rogue terrorist groups aiming to kill Americans and left us having lost years of potential global collaboration on security, economic and climate issues, while a handful of companies working as "contractors" in Iraq made tens of millions or even billions of dollars.

The states have seen the tax burden shifted heavily toward them, with no apologies and no plans for reversal. Because no other choice was readily available, given the deep recession he inherited, Pres. Obama's economic recovery strategy calls for putting off the reversal of Bush's tax cuts for the wealthy, in order to help spur job growth and a return to economic expansion.

Until then, states will see federal money harder to come by, will have to borrow, will be forced to raise taxes or commuter fares —where relevant— or decrease tax incentives. There are elections this year and next, in which voters will be judging whether sitting governors or legislatures, or members of Congress, deserve to remain in office, and anger over local and state taxes is sure to drive public opinion in those races.

The issue people need to keep in mind, because it is very much a present-tense problem, is what those officials did to support or oppose the Iraq war's massive drain on federal funding, what they thought about Bush's tax policy, and what they did regarding the 2001-2006 Republican Congress' unfunded mandates.