My proposal is very simple.  As the economy lists in its doldrums, why not goose the accounting reports and get investors buying stocks again?  Once stock prices rise gloriously and the Dow again sees 10,000, the economy will be fixed.

We can achieve this felicitous state by granting each company in the U.S. the ability to inject $5 billion into its own earnings.  As the banks and auto manufacturers remain in serious trouble, we can empower them to add $50 billion into their earnings statements.  If thought desirable, we could even increase these amounts.

We shall extend business enterprises the freedom to boost income in whatever quarters they wish over (say) the next five years.  That would allow corporate executives much needed flexibility to manage their earnings.  We don’t have to worry about transparency because Americans only want its promise, not its fulfillment.

Congress should permit these companies the freedom to show this infusion of earnings wherever they wish.  After all, in a capitalistic society as ours, managers are the ones who best know how to massage the income statements for maximal benefit.  We won’t worry about whose benefit is getting optimized.

So, if a firm wishes to increase its revenues by $5 billion, that option would be fine.  But, if a firm would rather decrease cost of goods sold or wages expense or even income tax expense, that would be permissible under this bill.

Firms like GE might want to acquire another entity and use its earnings surplus.  GE might even argue that they are entitled to $15 billion—$5 billion for itself, $5 billion for the acquired company, and $5 billion because of the new combined enterprise.  We should let them do this since earnings is easy to produce, costs us nothing, and will prove so advantageous to the economy.  Besides, nobody can understand their financial reports.

This suggestion also should include an early adoption of international accounting standards.  As the international accounting rules let business entities implement virtually any revenue recognition method they wish, then U.S. firms would automatically comply with these standards.

Of course, double-entry bookkeeping requires balance sheets to balance.  With the recognition of these new-found revenues or reductions of expenses, the retained earnings account increases.  What do we amend to ensure that assets still equal liabilities plus stockholders’ equity?  Easy, Congress should allow CEOs and their minions the privilege of either increasing assets or reducing liabilities by the same amount as the increase in net income.  Firms can choose which assets to increase or which debts to decrease.

I would suggest corporations reduce liabilities because that would reduce financial leverage from the dangerously high levels of today to something tolerable or even respectable.  Of course, creditors would want their money, so the debts aren’t really discharged.  Corporations just won’t show the liabilities, quite similar to how the FASB and the SEC permit banks and others not to disclose their hundreds of billions of dollars of debts in special purpose entities and other off-balance-sheet vehicles.

This stimulus bill won’t touch the cash flow statement.  After all, if investors can ignore Enron’s free cash flows of negative $4.5 billion in 1998 and 1999, cash flow must be unimportant.

Auditors shouldn’t mind this suggestion.  As they gave us no early warning signals about the subprime mess, they must not be too concerned about the quality of earnings.  Everybody will be happier with unqualified audit opinions.

Rating agencies will benefit from the proposal as they can give everybody investment grade ratings based on the positive earnings reports.  They no longer have to feel guilty for assigning unwarranted ratings.

Again, the cost of this program is zero.  Taxpayers will not spend anything on this project because what we are doing is merely increasing corporate earnings.

The benefits of this bill are obvious.  We goose accounting earnings, investors and creditors go wild.  They buy stocks and bonds and everybody’s retirement statements appear rosy.  Optimism abounds everywhere.  Stimulate the accounting, stimulate the economy.