Wednesday, December 19, 2012

Budget impasse?

Getting closer to the deadline for avoiding the so-called "fiscal cliff," the budget negotiations between President Obama and House Speaker Boehner have reached a delicate stage, with the president suggesting concessions some of his supporters are having difficulty swallowing, and the speaker threatening a "Plan B" that would circumvent the deal the two principal negotiators have been discussing. These negotiations are a little different from those that typically occur in mediation, where the negotiators (usually lawyers) are usually constrained by the clients in advance from offering anything the clients have not authorized. In this negotiation, the "clients" take the form of members of the House and Senate, an unruly bunch on both sides. The extent of the authority they have granted to their "lawyers," represented by Boehner and Obama, may not be known until the package is voted on.

The real "clients" are of course the public. The most politically active members of the public are asserting their settlement authority by loudly advising their representatives that the deal that is being floated may already have crossed some lines. For the Republican base, that line is represented by raising anybody's taxes and the failure sufficiently to rein in perceived out-of-control government spending. For the Democrats, it is possible cuts to their most beloved programs, Social Security, Medicare and Medicaid, as well as the possibility that the president may back down from his promise to raise taxes on the wealthiest Americans. 

What I would say to try to calm these hysterical "clients" is to remind them that it is best not to say no too soon. Show some flexibility and movement if you want the other side to do the same. Wait until the other side has presented what seems close to their best offer before deciding whether or not to accept it. And don't compare the other side's offer to the ideal of what you think you are entitled to. Compare it to the alternative of no deal.

Because in the real world, we don't often get exactly what we think we are entitled to. Instead we get a choice between the deal we can get the other side to agree to, and the alternative of no deal at all. And we might have to offer to accept less than we would like just to find out what the possible deal is.

Looking objectively at the current budget negotiations between Speaker Boehner and President Obama, I don't see anything for either side's supporters to be panicked or outraged about at all. Both sides are following fairly standard negotiating tactics. Both are giving ground very slowly. At this stage, the two sides don't really seem all that far apart. And the outlines of a final deal don't seem all that unreasonable.

Everybody knows the final deal will consist of a combination of revenue increases and spending cuts. For the Republicans, the revenue increases will be too large and the spending cuts too small. For the Democrats, the opposite. But look at how much progress we have made since the stalemated budget negotiations of last year, when the Republican side would not agree to any revenue increases at all. Suddenly, the Republican side seems willing to accept tax increases of approximately equal size to spending cuts, which would have been unthinkable for them last year. And to give up their attacks on Medicare. To get those concessions, the Democratic side has had to show some willingness to trim slightly their demands for tax increases on the wealthiest Americans, and to tinker with the cost of living formula for Social Security. This all looks like standard negotiating to me. Neither side would be getting closer to a deal, which the parties are, without showing this kind of flexibility. People are kidding themselves if they think that the other side in these negotiations would bend if their side just held firm to their initial positions. Negotiating just plain doesn't work that way. The way it works is the way we are seeing it unfold in public.

Both side's supporters should feel confident that their representatives are doing their best to obtain the best deal possible, and are using every bargaining chip and bit of power at their disposal. At the end of the negotiations, we might quibble about whether one side or the other left a little money on the table. But for now we have no reason to think anybody is going to get anything less than the best deal possible for their side.

If the parties do reach a negotiated solution, nobody is going to be entirely happy with it. That's one definition of a negotiated solution. The test is whether it is better than the alternative. Critics of the concessions their side is considering in the negotiation process, would do well to consider the serious negative consequences of failure. Those include tax increases for nearly all Americans, layoffs for federal employees and contractors, market reversals and credit downgrades that will affect the financial condition of the entire country. And perhaps most importantly, the growing sense that this country is so polarized and dysfunctional that it can't even reach agreement on something as basic as a budget, something that should never have been so politicized in the first place.

It's a budget, and it necessarily has to reflect the spending and taxing priorities of all of us. The only way it could truly fail would be for the budget to end up making one party cheer and the other party feel that its priorities were ignored. So people should be happy if we end up with something that the most partisan advocates on each side are not entirely happy about. The alternative is worse.



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