Bad Accounting
Instapundit says this is interesting (how stock options played a part in the Roaring 90's) and I agree:
The government was another beneficiary. Executives paid ordinary income tax when they cashed in the bonuses, and that led to a surge in government tax receipts that was little understood at the time. The budget bean counters assumed that those taxes were offset by reduced corporate taxes, because companies got deductions for the option profits, and so did not affect the deficit. But a lot of the profits came on options from unprofitable companies.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.
It's by Floyd Norris in the NY Times.
According to Advisory Opinion, this means the deficit isn't due to the Bush tax cuts, since revenues were due to fall anyway. Well I guess so, except Bush did cut taxes and presumably that resulted in some reduction in revenues which thereby increased the deficit.
But I don't think this is a dollar for dollar exchange. I'm not sure how large the Bush tax cuts were for the tax year that just ended, 2003. But let's say they amounted to $200 Billion. Had they been only $100 Billion it doesn't mean that the deficit would have been $100 Billion smaller. Presumably, the additional $100 Billion in tax cuts induced an increase in economic activity that offset some of those losses. Still, some of the deficit has to be related to tax cuts. I agree, though, with the general point that although the projected surpluses are gone, it's not primarily Bush's fault. He only gets to preside over the result.
I don't know where this appeared in the paper version of the Times, but Advisory Opinion seems to:
The New York Times doesn?t get it right very often, but when they do they bury it in the eighth paragraph in a technical article on accounting and tax law under the fold in the business section. I guess this conclusion isn?t as newsworthy as the page 1 article (complete with silly pictures) about how Hollywood greats like Whoopi Goldberg are slamming the president in their TV shows.