Thanks to David Broder for exposing how the federal government is running up billions in future obligations but not reporting them on its official financial statements. Instead, one has to look at the government’s obscure “Financial Report” in order to learn that the true deficit for Fiscal Year 2005 is not the widely reported figure of $319 billion but $760 billion.

The Feds get away with this by using cash, instead of accrual accounting, in the most widely-distributed financial statements. As Broder explains,”If you go to Target and buy an item for cash, it’s felt in your wallet immediately. If you buy the same item on a credit card, unless you are using accrual accounting, it is disguised until the bill arrives.”

Failure to use accrual accounting is a violation of the infamous Sarbanes-Oxley Act, fortunately, the federal government does not have to obey the standards it imposes on the rest of us.

Cross-posted at Free for all.