Federal finances are in a shambles and in need of radical overhaul. U.S. President Barack Obama's budget ignores this. However, with a shutdown, he will be able to tar Republicans as ideologues, steal the initiative on spending and taxes and leave his successor with a mess.

From 2007, the last full year before the financial crisis, to 2011, the second year of recovery, spending has jumped $1.1 trillion -- 40 percent. The president's budget plan would trim the deficit to $774 billion by 2022 but his projections have been rejected as too optimistic by private economists and political analysts of all stripes. He assumes cost savings and new revenues from healthcare reforms that are unlikely to materialize and a 4 percent economic growth through 2014, which few private economists endorse.

Most legitimate deficit reductions the president's budget accomplishes are through higher taxes on the wealthy and a new interest and dividend tax that will likely drive business investment and personal wealth offshore.

Higher taxes aren't the answer. In 2011, spending is projected at $3.8 trillion and revenues at $2.2 trillion. A 50 percent increase in all taxes and fees -- personal income, Social Security, Medicare and corporate taxes, entry fees into national parks and the like -- would leave the deficit at $560 billion. Even if phased in over several years, such a dramatic increase in taxes and fees would send the economy into a depression from which it would never recover.

Since 2007, only $200 billion would have been necessary to keep spending in line with inflation but Congress and the president, in the name of temporary stimulus, permanently increased spending another $900 billion on entitlements -- notably on increased Medicaid benefits; industrial policies for electric trains, windmills and the like; and more regulators, such as to accomplish bank reforms that haven't managed to restore lending to small businesses or end consumer credit card abuses.

Also since 2007, Social Security, like Medicare, began spending more than it takes in and is headed for insolvency, and skyrocketing costs for drugs, health insurance administration and malpractice are making both Medicaid and Medicare too expensive to continue in their present form.

Along with prudent streamlining and consolidation of regulatory and other discretionary programs, Social Security, Medicare and Medicaid must be radically altered.

Like an adolescent seeking an outsized allowance, Americans have been told these facts over and over again by journalists, economists and many moderate and conservative politicians. And Obama has boosted his re-election prospects by telling Americans it isn't so -- instead, he says soaking Americans earning more than $250,000 will solve all their problems. He isn't leveling with voters!

Republicans have tabled a plan for budget reform. Solutions for Social Security are absent and suggestions for Medicaid and Medicare are irresponsible -- Republicans recommend vouchers for seniors and block grants to the states to finance Medicare that merely would shift the burden of a broken system onto the elderly and governors. At least open discussion of this plan would focus Americans on the need for real reform.

The Social Security retirement age must be raised, now, to 70 for all Americans under 55, and the federal government must more earnestly regulate drug prices and health insurance administrative costs and curb malpractice cases.

The U.S. healthcare system is less efficient than better-regulated systems abroad. Specifically, Americans pay 18 percent of gross domestic product for healthcare, while the Germans and Dutch pay 12 percent to accomplish outcomes as good or better.

Americans simply pay much more for drugs, health insurance administration and malpractice than do the Europeans but each interest group has enough congressmen or a president in their vest pocket to keep real reform at bay.

Comically, Obama, through his surrogates in the Senate, and the House Republicans are scrabbling over about $40 billion in cuts from 2011 spending and that comes to less than 1 percent of federal spending and 3 of the deficit.

If the budget impasse causes the government to shut down, the president will use his superior rhetorical skill to paint Republicans as irresponsible. Voters, not wanting to face up to the insolvency of Social Security, Medicare and their government overall, will believe him.

Nero fiddled while Rome burned but at least the citizens were outraged. In contemporary America, the president conducts an orchestra of equally irresponsible citizens.

(Peter Morici is a professor at the Smith School of Business, University of Maryland School, and former chief economist at the U.S. International Trade Commission.)

(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

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