How American Tax Dollars Prop Up Israel's Zombie Economy
Written by GenXGirl
For decades, the unwavering support of the U.S. government for Israel has consistently prioritized Israeli interests, often at the expense of American taxpayers and their constitutional rights. Economist Thomas Stauffer estimated that U.S. support for Israel cost taxpayers $1.6 trillion between 1973 and 2002. Using his formula, a conservative estimate places that cost at approximately $3 trillion by 2024 which is equivalent to 8% of the current $37 trillion US national debt. As global sentiment shifts and Israel faces increasing economic and diplomatic sanctions, the U.S. government is taking drastic measures to shield it, damaging both American economic interests and the nation’s international standing.
Israel’s Zombie Economy
Israel’s economy is under significant strain as a result of its genocide campaign in Gaza and to a lesser extent, the West Bank, prompting increased U.S. intervention. Key vulnerabilities include:
Zombie Economy: While information about Israel’s struggling economy is not widely discussed in the west, Israeli economists such as Dr. Shir Hever have concluded Israel heavily relies on foreign investments and loans to remain viable, otherwise, it is a Zombie economy.
BDS Impact: The Boycott, Divestment, and Sanctions (BDS) movement is reducing foreign investment.
Tech Sector Collapse: A 90% drop in tech investments has exacerbated economic instability.
Tourism: Israel’s tourism industry has stopped.
Port Damage/Bankruptcy: Eilat Port declared bankruptcy in 2024 while other ports have been damaged during Israel’s war with Iran.
Weapons Dependency: While Israel buys weapons from the U.S. using American taxpayer money, it depends on European supply chains that are increasingly imposing sanctions.
Israel's economy contracted in Q2 2025, primarily due to the severely disruptive 12-day war with Iran in June.
GDP Shrank by 3.5% annually and 0.9% quarterly.
All major components fell, with a sharp 12.3% drop in investment and a 4.1% decline in private consumption.
Exports plummeted 12% while imports also decreased by 3.5%.
Reflecting this impact, the Bank of Israel recently lowered its 2025 growth forecast to 3.3%. In 2024, Israel ran the largest budget deficit (which is the gap between a government’s revenue and expenses in a given year). Its genocide campaign in Gaza and shrinking economy has widened the gap between government spending and revenue collection (taxes).
To bridge this gap in funding, Israel has been selling a record amount of bonds. Israel issues three types of bonds to foreign investors:
Sovereign Bonds: Underwritten by banks and tradable on financial markets.
U.S. Guaranteed Bonds: Backed by the full faith and credit of the U.S. government, which assumes liability if Israel defaults.
Israel Bonds: Underwritten by the Development Corporation for Israel and not sellable on secondary markets.
US Guaranteed Bonds
U.S. Guaranteed Bonds for Israel are a form of U.S. government-backed loan guarantees, authorized by Congress. This program enables Israel to borrow from private commercial lenders at more favorable, lower interest rates. The U.S. guarantees the debt, should Israel default. The current program is based on a 2003 authorization of $9 billion in guarantees, designed to help Israel access capital on better terms. As of 2025, Israel has utilized $4.1 billion of this guarantee capacity, leaving approximately $3.9 billion still available for future use.
Sovereign Bonds
Sovereign Bonds are underwritten by banks, so for this purpose of this article which focuses on bond purchases using taxpayer funds and/or pension funds, we won’t focus on Sovereign Bonds, except to state that Israel has issued $39.6 Billion in Sovereign Bonds to private investors.
Israel Bonds
The Development Corporation for Israel Bonds, is a New York-registered broker-dealer that serves as the underwriter for Israel Bonds. It markets these bonds not only to individuals but also to investment funds, pension systems, civic and religious institutions, and state and local governments.
Since October 8, 2023, over 35 US States and local governments have purchased Israel Bonds. Of those 35, specific data is available for 17 US states and 9 counties which have invested $2.4 billion of state and local government and employee pension funds in Israel Bonds. In this same period, credit rating agencies such as Moody’s, Fitch, and S&P downgraded Israel’s credit rating and warned of the potential to reach junk status. This assessment is reflected in their performance. According to reporting by DropSite News, Israel bonds earned 20% lower returns than when purchased. Americans have consequently lost an estimated $320 million in pension gains due to state and local officials who raised caps on foreign bond purchases and specifically acquired high-risk Israel bonds.
Israel strategically targets US state and local governments. In a briefing at the Knesset, the former Chief Censor and Director of the Ministry of Strategic Affairs, Brigadier General Sima Vaknin-Gil, who works for various Israeli funded NGOs operating in the US, stated it is easier to pass laws in favor of Israel at the state and local level in the US. To date:
37 states have passed anti-boycott laws.
35 states have adopted IHRA-based censorship laws that equate criticism of Israel with antisemitism.
17 states and 9 counties from these States have also purchased high-risk Israel Bonds.
The Influence of the Israel Lobby
An investigation by the International Consortium of Investigative Journalists (ICIJ) reveals that Israel Bonds has engaged in a sophisticated sales operation funneling billions of dollars from U.S. state and local governments to Israel. Through highly personalized pitches and pro-Israel messaging, the group cultivated exceptionally friendly relationships with public officials, often blurring ethical lines by offering access to glitzy events, gala dinners, and private meetings with top Israeli leaders. In September 2025, a delegation of 250 US State lawmakers were invited to Israel for an all-expense-paid-trip called “50 States and Israel”. US officials frame these investments as “shows of support” instead of sound investments. Ethics experts warn that such dealings, which mix personal benefits with official financial decisions, cross ethical boundaries and raise concerns about conflicts of interest and FARA violations.
Through these efforts, Israel has successfully lobbied for policies that entrench U.S. support, often at great risk to American taxpayers. U.S. policies actively divert taxpayer funded resources to Israel; negatively impact its national standing in the world; and suppress criticism and boycotts of Israel, infringing on American rights by:
Punishing Boycotts: State and Federal laws penalize individuals and businesses for participating in boycotts against Israel. As recently as September 2025, the House of Representatives passed a provision in the 2025-2026 NDAA that will blacklist government contractors that boycott Israel from receiving federal contracts.
Criminalizing Criticism: 21 IHRA antisemitism Bills have been introduced in Congress to equate criticism of Israel with antisemitism, stifling free speech. The Trump Administration signed two executive orders adopting the IHRA definition of antisemitism.
Forcing Investment in Israel Bonds: Americans are being coerced into purchasing high-risk Israel bonds, oftentimes, without any awareness that their tax dollars or pension funds have been invested in risky bonds.
Funding Israel’s Military: Taxpayer dollars are funneled into Israel’s military, despite domestic needs.
Fighting Israel’s Wars: The US spends billions on conflicts aligned with Israel’s interests, instead of America. The US government has spent at least $75 billion on Israel in the past two years alone.
Additionally, laws in states like Pennsylvania specifically prohibit divestment from Israel bonds. In 2025, Florida passed legislation barring local governments from refusing to purchase unrated-high-risk Israel bonds (Israel started issuing unrated bonds after credit agencies lowered their credit rating).
Israel Bonds & Israel Lobby’s Crackdown on Student Protestors
The Israel lobby’s push for anti-BDS and anti-free speech legislation is directly connected to these bond investments. Since the early 2000s, students on university campuses have pressured their universities to divest from Israel. In 2016, Israel Bonds launched a program called “Alternative BDS (Bonds Donated to Schools),” encouraging wealthy pro-Israel donors to buy bonds and donate them to universities. Since universities must hold the bonds until maturity, this effectively binds them to Israel financially and precludes divestment. This strategy underscores the extensive influence pro-Israel donors wield over academic institutions and their efforts to suppress student criticism of Israel. Since Israel’s genocide campaign in Gaza, the pressure campaign to divest from Israel has exponentially increased. In response, the Israel lobby launched an aggressive attack on students through doxing campaigns, arrests, expulsions, and deportations. The Israel Lobby also worked through the Trump administration to pressure over 4000 universities to adopt the IHRA definition of antisemitism, implement IHRA mandatory training, and adhere to ADL’s campus antisemitism report card -- the culmination of which is a total crackdown on student protestors and the BDS campaign.
Backlash
Much like student protestors, as Americans become aware of Federal, State, and Local governments purchasing high risk Israel Bonds, based on political ideology rather than sound financial decision-making, we are beginning to see resistance at the local level.
In July 2024, the Presbyterian Church (USA) voted to divest from Israel bonds and denounce Christian Zionism, citing human rights abuses against Palestinians.
In New York City, the city’s Comptroller stopped renewing Israel bonds and drove the holdings down to zero.
In April 2025, residents of Lansing Michigan demanded the Michigan Retirement Fund divest from Israel Bonds.
In August 2025, the Iowa City Council unanimously voted to boycott and divest from Israel bonds.
In Palm Beach County, Florida which purchased $700 million in Israel bonds, citizens have filed lawsuits against their local government.
Additional Sources:
https://mondoweiss.net/2024/07/the-end-of-israels-economy/
https://dawnmena.org/wp-content/uploads/2024/04/DAWN-Israel-Bonds-DOJ-referral-April-2024-Public.pdf
https://www.axios.com/2024/02/13/israel-war-downgrade
https://m.jpost.com/opinion/a-direct-strategic-response-to-bds-459692
https://spectrumnews1.com/oh/columbus/news/2024/04/23/cuyahoga-county-israel-bonds
And still it continuies to rule the world. "HI, I'm God, I know everything and I'm the creator of the cosmos, but I'm comptelely broke and dying of cancer, so I need your help, please." Does that make sense? The owners of Israel shall remain forever in the most remote recants of our imagination as conspiracy figures we are forbidden to think about, but we can analyze the intrincacies of every detail of their external persona. We'll never know shit about the real source of this hell, but the owners of israel are the owners of everything in this militaristic eternal torture machine, inhabited and run by fascists. Fucking hurray! - Sorry for my anger and pessimism, but after 61 years watching people get dumber and dumber, softer and softer, and more fascistic by the day, one loses faith.
https://open.substack.com/pub/kenmatterson/p/peter-thiels-sexual-fetishes?r=lp56&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true