Friday, December 28, 2012

End game

Nobody should be surprised that the "fiscal cliff" negotiations are going down to the wire, and perhaps beyond it. Republicans and Democrats have been fighting tooth and nail over these budget issues for years now, and nobody is about to concede gracefully to the other side. Only when both sides are absolutely sure that the deal on the table is the only deal available, and that the deal is better than the alternative--an unpleasant package of tax hikes and budget cuts that will take effect automatically in January--is there a possibility that both sides will accept the deal. In this situation, the deadline itself might be the only thing that will force the parties to make a deal, which means there is no reason to expect any deal to be made until that deadline is about to expire. Except that the deadline can be extended, and except that some of the parties think their leverage will actually improve after the deadline has passed, and some of these negative consequences start taking effect.

I've seen parties in protracted lawsuits reach this point numerous times. Contested lawsuits are not usually just about the money. If that were all that the parties had at stake, they would be able to resolve the dispute fairly easily. No, if the battle is hard-fought, that is because one or both parties believes that a matter of principle is at stake, or a personal insult must be righted. It's the same with members of Congress. Republicans firmly believe that the only acceptable way of dealing with our economic troubles is to keep taxes low and keep reducing the size of government, particularly on the kinds of social programs that Republicans believe are sapping our economic strength. Democrats firmly believe that these same programs are vital to protecting millions of people from the ravages of the economic downturn, and that they will also help stimulate the economy to faster growth. They also firmly believe we need to reduce inequality and raise revenues, and can accomplish both goals by increasing the highest marginal tax rates. If this were just a matter of choosing a compromise number between say, 35 and 39, that could be easily accomplished. But any number that we end up choosing will be taken as a surrender on a matter of the most sacred principle by at least one side, and perhaps by both sides.

How can parties be induced to accept the surrender of their principles? In private conflicts, it's sometimes effective to remind people of the toll the conflict is taking on them, and to ask them to imagine being able to put the conflict behind them. Sometimes they need to realize that no matter how long they negotiate or fight, they can't improve what they view as a lousy deal. At that point, the only choice they have is between peace and continued conflict. People only reach that point at the end of a long period of negotiation, when there is no more time left to negotiate.

Politicians might have an even harder time making peace than private parties. Perpetual conflict is part of their job description. Even if they reach one budget agreement today, they will just start the next day preparing for battle over next year's budget agreement, or some other issue of even more sacred principle. And politicians have to answer to their constituents, who are even less forgiving and understanding of the need to compromise than they are. Just like parties in private disputes, the politicians are only going to arrive at the point where they might accept a deal when there is no more time left to negotiate. And even at that point, a lot of them would just as soon continue to fight. 

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