Cooking the books,

[gsvol]

Obama style.

Fiscal accountability is imperative because when government spends more than its citizens can afford, it hollows out the productive capabilities of the nation.

Resources that should be used to create new wealth are allocated to pay interest on accumulated debt; instead of investing in tomorrow, people must labor to pay yesterday's bills.

When deficit spending is accommodated by loose monetary policy, it leads to internal bankruptcy -- indeed, whole nations have foundered on this path.

Here's an example of some fuzzy math: The Obama budget shows GDP at $14.240 trillion in 2009 and projects it at $17.498 trillion in 2013. In other words, it projects that the total value of U.S. economic output will increase by 23% over the next four years, i.e., it will be nearly one-quarter larger.

The projected deficit for 2013 is $533 billion in the Obama budget; hence, $533 billion divided by $17.498 trillion is 3% -- voila! the impressive deficit-at-3%-of-GDP claim four years out.

The fact that the mainstream summary of private economic forecasts known as the Blue Chip Consensus predicts nominal GDP in 2013 will be $730 billion lower than does the Obama budget -- and also assumes lower real growth and higher inflation across the same four-year period -- was dismissed not long ago by Christina Romer, chair of Mr. Obama's Council of Economic Advisers. "We are economists and not soothsayers," she quipped.

Economists may not be soothsayers, but they should strive to be truth tellers. It's one thing to claim that the dollar value U.S. economic output will be one-quarter higher in four years; it's quite another to suggest that the U.S. GDP in 2013 will be worth one-quarter more.

Can the president's economic team definitively state that inflation is not baked into the plan? Would Mr. Obama be willing to guarantee the stable purchasing power of the dollar?

The notion that monetary policy might be in cahoots with fiscal policy is sure to elicit howls of protest all the way from the Treasury to the Federal Reserve -- about a mile's distance. But no one can seriously suggest that the Fed has not been politicized beyond all pretenses toward independence.

The Fed has become a key player in the government's efforts to deal with the credit crisis, purchasing hundreds of billions in mortgage-backed securities guaranteed by federal agencies and taking them onto its own balance sheet.

Last month the Fed issued a joint statement with Treasury that they stood ready to inject more capital into banks "to provide a cushion against larger-than-expected future losses." And according to yesterday's surprise announcement, the Fed now plans to buy up long-term Treasury bonds -- an act of fiscal incest -- while taking another $1 trillion or so onto its balance sheet to boost consumer spending.

So the Fed is involved up to its neck in this blueprint for the future. Does anyone doubt that former Treasury Secretary Larry Summers, who heads the White House's Economic Council, is slated to be the next Fed chairman?

Revived estimates.

That would mean the actual tax hike would run well into the trillions, roughly between $1.3 trillion and $1.9 trillion between fiscal years 2012 and 2019 by Furman's (Obama's spokesman) own estimate.

Remember that these are just the costs for the first 8 years of a 40 year program that gets much more expensive over time.

This is the final knock-out blow for a wobbly U.S. economy, and the more people learn the facts the more strongly they'll oppose it.