In October 1990, the elder President Bush allowed marginal tax rates on upper incomes to be increased. Individual income tax receipts promptly dropped to 8.8 percent of personal income in 1991-92, from 9.4 percent in 1988-90.

Why did budget deficits soar in the early 1980s? First and foremost, the Federal Reserve quite deliberately raised the fed funds rate from 9 percent to 18.9 percent between July and December 1980 and kept it above 14 percent through June 1982. Whether necessary or not, that collapsed the economy and pushed the Dow Jones industrial average down to 777 in 1982 and also greatly increased the government's interest bill.

Second, as Stockman told Greider, "the defense numbers got out of control." Defense spending exceeded 6 percent of GDP in 1983-87, in peacetime, compared with 4 percent today, when we are embroiled in a costly war. If all that military hardware ended the Cold War, it was a bargain.

Contrary to Birnbaum, Jack Kemp, not Stockman, was "the face of Reaganomics." Stockman quickly became the face of Kaufmanomics. Alluding to Wall Street guru Henry Kaufman's fear of "inflationary deficits," Greider wrote that "Stockman agreed" Kaufman was right.

Aside from the exaggerated inflation forecasts, Kaufman and Stockman promulgated two other fallacies that gained favor with Blackstone Group co-founder Peter G. Peterson, who later hired Stockman. The 1981 fallacy was that it was the prospect of future budget deficits rather than the reality of the Fed that doubled the fed funds rate a year before the tax cuts were even enacted and three years before they were phased in.

The 1982 fallacy was that budget deficits would absorb national savings, curb business investment and thus "abort" the recovery. Stockman's team released figures purporting to show that deficits would absorb 128 percent of savings, which is logically equivalent to eating 128 percent of your dinner.

David Stockman never studied economics with care, in school or out, so he made several big mistakes in 1981 when chatting with Greider. Stockman is an ambitious but honest man who made mistakes 25 years ago and may have made mistakes again. Yet in this case and others, I suspect that efforts to criminalize "high-profile" accounting errors in the post-Enron era may have gone too far.