Saturday, December 14, 2013

Managing unresolveable conflicts

This week, by passing a new budget agreement through the House (still waiting on the Senate), Congress finally seems to be learning how to get back to business. To do that requires managing truly unresolveable conflicts, instead of allowing those conflicts to gum up the works completely.

Positions on both sides have hardened to the point where Republicans will not accept even a penny of tax increases, and Democrats will not accept cuts to entitlement programs. That means the usual split-the-difference approaches no longer work. Meanwhile discretionary spending has already been cut more than both sides feel comfortable with. Support for restoring defense cuts in particular cuts across party lines. So how do you craft a budget agreement in this environment?

First you choose representatives who command trust from each side. In any negotiation it is vital that the parties' agents have full authority and the support of their principals. Conservative Paul Ryan and Liberal Patty Murray fit the bill perfectly. Next you send the two negotiators into a room together and make sure they understand they have to emerge with an agreement. (The reason everybody finally understands the need to make an agreement is that we have just seen what happens when the parties fail to reach an agreement before the deadline, which is that the government shuts down, and everybody suffers.) 

The negotiators also had to understand the need to respect the other side's most important interests. That meant conceding to the Republicans that taxes would not be raised, and conceding to the Democrats that entitlement spending would not be cut. (Instead it's federal employees' pensions that will be taking a hit.) Within that framework, the parties found room to restore some discretionary spending that both sides wanted, and also include spending cuts and revenue increases that won't take effect for some time, thus allowing both sides to say they achieved some important interim goals, and that the short term deal is better than no deal. 

Is there a lot of unhappiness with this agreement? Of course. The hard-line conservatives are bemoaning the spending increases, and complaining that the deal does not do enough to reduce government in the long term. Liberals remain frustrated with the spending levels to which the government has become constrained.

Many mediators would say that the test of a good settlement is that it leaves both sides feeling equally dissatisfied. I never like to tell parties in conflict that they should be unhappy with a negotiated outcome. If they achieved something better than the alternative that would come with the failure to reach agreement, they should view the agreement as a positive. (By alternative, I do not mean the best possible alternative outcome for each side, i.e., victory for their side, and surrender by the other side. I mean the most likely outcome, which in this case is continued conflict and paralysis.)

Still, one wishes that more could have been achieved by this negotiation process. Not more in the sense that either side could have obtained a larger share of its policy objectives at the expense of the other, but more in the sense that the parties failed to reach a more comprehensive agreement. In the past Democrats have sometimes recognized that reforms to entitlement programs might be necessary to keep those programs on a sound footing. Republicans have sometimes recognized that tax increases might be necessary to close budget gaps. A truly transformational agreement would have required both sides to cross lines that they are currently unwilling to cross, because they have defined those lines as matters of principle. To do that would require both sides to recognize more legitimacy to the others' point of view than they are currently willing to entertain. As a result, a more comprehensive, transformative agreement remains, at least for the time being, out of reach. 

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