Sunday, July 31, 2011
I do a lot of mediations professionally myself, and I never like to tell people that. Why would I want people to leave unhappy? I prefer to try to persuade parties to a conflict that they should feel good about the settlement they are making. They should get a good night's sleep and feel that a weight has been lifted from their shoulders, and that it is good to put a dispute behind them. One way to persuade people that they are doing something beneficial for themselves by resolving a litigated dispute is to get them to understand that they should not compare the deal on the table with the deal that they wanted or believe they deserve. The only thing people should be comparing a deal to is the alternative of no deal. What that means in the private dispute resolution context is that you have to compare the offer being made by the other side, with the alternative of proceeding with a costly and risky lawsuit. You should not compare the offer being made by the other side with what you believe you are entitled to in some ideal system of justice.
In evaluating the debt ceiling deal, you have to compare the deal on the table, not with what either side wanted to achieve in these negotiations--for Republicans bigger spending cuts and a balanced budget amendment, for Democrats some increase in revenues. You have to compare this deal with the alternative of no deal. Here's what no deal would mean: The Treasury runs out of cash on Wednesday, and then the President has to decide whether to ignore Congress and unilaterally order the Treasury to borrow more money anyway. And that probably causes a constitutional crisis as well as an economic crisis. Alternatively, the President and the Secretary of the Treasury have to decide to stop issuing checks to a lot of government contractors, federal employees, veterans, seniors, people on disability, and a lot of other people who depend on government checks to live. There are only a small number of Congressmen who actually want to play out either one of those scenarios.
Let's compare that to the deal. The deal prevents a default, and commits Congress to enact some substantial spending cuts and possibly some revenue increases, most of which won't kick in for quite some time, maybe five or ten years from now.
Which means that, even if you don't like the plan for handling these deficit issues in the future, right now this deal is still way better than no deal. Which means that everyone should be happy.
As for President Obama, he was somewhat thwarted in his goal of getting the parties to make some tough decisions about these priorities right now. Some of those decisions are being put off until later in the year. But he seems to have achieved his main goal of taking this debt ceiling issue off the table until after the 2012 election. And that means we can have a real debate in next year's election about taxing and spending priorities, and that ultimately it will be up to the American people to elect the kind of Congress they want to achieve the taxing and spending priorities that they want.