The Economist is Jolly well right

2 August 2008. The Economist asserts that the dispensation of Bp. Fernando Lugo of Paraguay from the clerical state was the first time a bishop had been dispensed from the clerical state.

16 August 2008. John Jolly asserts in a letter to the editor that The Economist is mistaken, for the 1498 resignation of Cesare Borgia from his bishopric(s) and cardinalate preceded Lugo's dispensation.

I think The Economist is correct.

The disgrace that the Borgias brought on the papacy, coupled with incomplete records and marked variations in terminological usage, make drawing conclusions about that time tenuous but, that said, it seems clear that Cesare Borgia was ordained only to diaconate, and that his other offices were, under the law and, worse, the practices, of the times, graspingly administrative in nature, not sacerdotal. (See, e.g., Salvador Miranda's "Cardinals of the Holy Roman Church").

Well into the 19th century, some prominent cardinals were only deacons (e.g., Giacomo Antonelli, Pius IX's Secretary of State) and even today, a few cardinals are but priests (e.g., Avery Dulles). For that matter, the current classifications of cardinals as "cardinal-bishops", "cardinal-priests", and "cardinal-deacons" (1983 CIC 350-351) are not indicative of the kind of ordination these men have received.

Nothing, it seems, was beneath the Borgia curialistas, and one always hesitates to try to prove a negative, but at this point I agree with The Economist and can point to no dispensation of a bishop from the clerical state prior to Fernando Lugo's in June 2008.