A word the Bush administration made up, in hopes that people will confuse various islamic militants (a collection of divided guerilla groups, terrorists and/or actual freedom fighters, with often radically different and sometimes opposing goals, who are not associated with any single nation. But hailing mostly from third-world nations.) with the nazi's (A single group, at the time in control of Germany, who sought to dominate Europe and its colonial empire, if not the world. Who have become synonymous with the evilist side of mankind.)
They hope that if enough people are gullible enough to swallow this they'll support the Iraq war. And believe Iraq harboured Osama or WMD's or whatever else it was supposed to be guilty off.
If enough people are stupid enough to swallow this then the rich oil barons actually controlling the Bush administration can freely plunder the mid-east, give themselves huge tax-cuts (out of the pockets of the far less affluent common man), make record profits, bust some unions and more such. Generally with intend of eventually becoming a sort of aristrocracy in a setting similar to a latin american 'banana republic' style dictatorship. By the looks of it.
The islamofascists are going to kill you! Only the Republicans can stop them! And we'll get Osama too! We think he's in Syria or Iran now! Or maybe Libanon! Fuck, we'll just invade the entire mid-east! And you pay for it! And for our third yacht! Whilst we make tons of profit from all the oil!