ARE CHANGED ACCOUNTING RULES THE REAL CAUSE OF THE DEFICITS? Advisory Opinion notes this New York Times story by Floyd Norris that says so. Excerpt:

The wild swings in federal budget deficits might have been reduced. Companies would owe a lot less money. Less wealth would have been transferred from shareholders to managers, but then perhaps less paper wealth would have been created. Richard A. Grasso might still be running the New York Stock Exchange.

All that might have happened if American politicians, a decade ago, had not forced the Financial Accounting Standards Board to back down from its proposal to force companies to record as a compensation expense the value of stock options given to employees. . . .

That helped to produce the Clinton budget surpluses, and the bursting of the bubble meant that most of the forecasted surpluses were going to vanish anyway, even before the Bush administration cut taxes.

Interesting. I wonder why we haven’t been hearing more about this?