America seems much in need of Roosevelt's maxim to stop fearing fear itself. Virtually all comment on the Mumbai massacre has mentioned 9/11 and al-Qaida, and thus invited citizens to continue feeling afraid. No matter that Mumbai appears to have been primarily about Kashmir and the status of India's Muslims. No matter that Osama bin Laden has no dog in that fight. Any stick will do to elevate al-Qaida as America's enemy number one.

Last week, the CIA warned of a terrorist threat that "might be unleashed" during the presidential transition, a threat that George Bush described as "dangerously real". On Wednesday Barack Obama was formally told by a congressional inquiry that "it is more likely than not that a weapon of mass destruction, either nuclear or biological, will be used in a terrorist attack" in his first year of office. The inquiry demanded that an official must be appointed "to oversee efforts to prevent such an attack", as if millions of Americans in and out of uniform were not doing that already.

Then London added its pennyworth, with a Home Office minister, Lord West, telling of "another great plot building up again" and a "huge threat" from al-Qaida. The purpose of all this scaremongering remains a mystery.

Reactions to Mumbai have seemed to suggest Americans are still seeking fellowship in their 9/11 pain, as after the London and Madrid bombings. Gone are the days when Americans would tell Britons to shrug off IRA terrorist attacks (many instigated from America) and grow up. Any explosion anywhere now abets the extraordinary 9/11 iconography, underpinning the politics of fear that has been the leitmotif of the Bush presidency.

Debating this presidency in New York on Tuesday night, I found myself pitted against Bush's impresario of fear, Karl Rove. Nothing in his master's glorious reign quite matched his "victory" over terror. The sense of unreality was equalled by Rove's supporters, to whom all who did not fear the "Islamofascists" were "liberal upper-east side elitists", an apparently crushing epithet. One assured me that Afghanistan would soon be won by merely "moving the surge" to Kabul. The whole evening was like the scene in Gone with the Wind where Southern gallants out-boast each other in predicting victory over the Yankees.

Rove was undeniably a master manipulator of fear politics, like Tony Blair's Alastair Campbell, who called him a "kindred spirit". Both Bush and Blair were led to portray al-Qaida in its Tora Bora cave as they had Saddam Hussein, as a threat to their respective realms. It was what the sociologist Ulrich Beck described as an exaggerated risk "exploited as an elixir to an ailing leader". On this the two leaders built a culture of self-validating counter-terrorism, where both the absence of any threat and the presence of one can be made equally supportive.

The media's fondness for describing any explosion as "al-Qaeda-linked" has turned what was a tiny, if efficient, cabal of fanatics into a global menace, ridiculously on a par with Hitler and postwar communism. Whoever said the political brain has advanced over time was mad.

On every visit to America I am stunned by the pervasiveness of fear. Terrified officials pounce on the slightest deviation from security rules. Americans must strip almost to their underwear to board even the shortest domestic flights. IDs are scanned in the meanest office blocks. Computers must be dismantled. National guardsmen troop out at dawn to protect New York installations "against the terrorist threat".

The repressive Patriot Act - mocking a patriotism that was once built on courage and the rule of law - remains in operation. Getting through American immigration with a brown face is an indignity that many Indians and Arabs of my acquaintance now simply refuse to endure. I had trouble even with a Baghdad visa in my passport.

Barack Obama, who is pledged to close Guantánamo Bay, is being challenged to say what he will do with what the conservative Weekly Standard asserts are "250 participants in the most devastating terrorist attacks in history" from "an enemy unlike any other this nation has ever faced". Britons should not smile at this hyperbole. The same madness afflicts Jacqui Smith's Home Office.

In the 1960s Richard Hofstadter, the American political scientist, puzzled over the anti-intellectualism of much of American public life, echoing the remark of the Puritan, John Cotton, in 1642 that "the more learned and witty you bee, the more fit to act for Satan". Listening to the debate on Tuesday I realised how deep is that strand, how strong the line of descent to the war on terror from previous generations who likewise puffed up the mafia and home-grown communism.

The 1950s Kefauver commission on organised crime sought a foe to demonise as foreign, sinister and ubiquitous. The inquiry found that there was no national "mafia" worthy of the name, or of their attention, just disparate bunches of local hoodlums. Kefauver and the FBI, whose burgeoning empire depended on him, were furious. They had come to need the mafia and its menace to justify their budget, effort and status.

The same synthetic sense of fear enveloped the McCarthy hearings on communism. A grain of truth was exaggerated to boost McCarthy's standing as a defender of the people against a real and present danger, that of reds under every bed. Communism had to be erected as an internal weapon of mass destruction, and much cruelty resulted.

At least organised crime and communism posed genuine threats to American liberties. Al-Qaida does not, yet it has become the ruling obsession of Bush's courtiers. They see al-Qaida fiends on every side, bearded mullahs, caches of bombs, ricin and anthrax. The precautionary principle has become fanaticised. By treating the unknown as an enemy, we ensure that the unknown becomes one.

Most of the outrages committed by graduates of the Pakistan terrorism camps are locally motivated, and will continue as long as such motivation survives. A network of criminal suicide squads with no coherent programme has no conceivable hope of undermining western democracy. It can just set off bombs, and will always do so if front-line policing is weak and constantly overruled by a grand "counterterrorism" bureaucracy.

Just when America had won a real victory in the century-old combat with communism, it allowed itself to be terrified by a band of fanatics who, in part through America's negligence, "got lucky once" and pulled off a coup on 9/11. For seven years its behaviour at home and image abroad have been dogged by the reaction to it. The challenge to Obama, here as elsewhere, is immense.

The attractive feature of the America in which I once lived was its bold self-confidence. To find the survivors of the Bush presidency still cowering in a mental bunker afraid of a bunch of Arabs - and with British ministers for company - strips western democracy of a leadership that should be both heroic and sensible. It is surely an un-American activity.

simon.jenkins@theguardian.com