I’ve been meaning for a while to write a tongue-in-cheek post about how the real reason Joe Lieberman lost to Ned Lamont was his wrong-headed stance on stock-option expensing in the 1990s.
When the Connecticut-based Financial Accounting Standards Board proposed in the early 1990s that options grants be counted as a cost and subtracted from earnings, Lieberman led the successful charge in Washington to bully FASB into backing down. Among his most vocal partners in accounting crime was California’s Barbara Boxer, although I’m a little bit more sympathetic to her stance because it was pretty much impossible to find anyone in her (Northern) part of the state in the 1990s who wasn’t brainwashed into thinking that options had magical economic powers and expensing would kill the magic. Only after the corporate scandals of the early ’00s was FASB finally able to push through with options expensing (and even then Congress might have thwarted it if not for the resolute stance of, of all people, Alabama Republican Richard Shelby, chairman of the Senate Finance Committee).
It turns out, though, that I’d been beaten to the punch. Jack Ciesielski today alerted readers of his often-entertaining accounting blog to an Aug. 9 post by economist Dean Baker on the topic.
There may not have been a single person in the state of Connecticut who voted against Senator Lieberman yesterday because of his harassment of FASB. Other issues loomed larger. But those who think that honest accounting is essential to the working of the economy might believe that some justice was done in this election.
It turns out Baker wasn’t even the first to bring this up. On Aug. 6, a Daily Kos poster named Treebeard offered a detailed account of Lieberman’s role in the options travesty. So maybe the issue did swing a few votes (although I guess any Connecticutter reading Kos was already voting Lamont). In any case, watch out, Barbara Boxer. The accounting purists may be coming to get you.