Wednesday, November 14, 2012

Opening bids

Politics doesn't take a moment's rest after an election. All the election does is affect the strength of each side's bargaining position. Now we are hearing the opening salvos in the upcoming budget wars. Republican Congressional leaders recognize they are entering that battle in a significantly weakened position, and are already hinting at the possibility of compromise. Still, they have not yet given any substantive ground at all on their previous commitments not to raise anybody's tax rates. President Obama and Democratic Congressional leaders are standing pat on their promise to raise the top bracket rate. They are almost daring the Republicans to drive us over the so-called "fiscal cliff."

My recommendation is not to pay too much attention to the initial posturing by either side. That's the same thing I tell people when I mediate disputes in litigation. Initial demands and offers should always be taken with a hefty dose of salt.  These positions are often deliberately designed to communicate just how tough a negotiation the other side can expect. Since parties do not expect the other side to jump at an opening offer, they almost always set them too high (or too low) to give the offering party room to negotiate. Sometimes parties want the other side to think they are crazy or unreasonable. That means it usually doesn't help to express outrage at anything said in the opening rounds of a negotiation. There is little reason even to take these opening statements seriously.

Karen Brzys
There are good reasons, supported by research, for parties to open negotiations with unreasonable demands. They serve the purpose of framing the other side's expectations, a concept known as "anchoring." These initial demands set the outside boundaries for a negotiated resolution, and serve each party's interests best by dragging those boundary markers as far as each side can plausibly drag them, leaving a lot of room in the middle for an agreement both sides might be able to live with.

It's the second round of offers where negotiations get more interesting. In that round, the Republicans will probably let the Democrats know what they might be willing to do to raise revenues. The Democrats might be willing to let the Republicans know what steps they might be willing to consider to reduce the growth of entitlement programs. The parties could be discussing a total overhaul of the tax code as a means of satisfying both the Republican demand to keep rates low, and the Democratic demand to raise revenue.

The crunch will not come until we are weeks or even days away from the December 31 deadline when the Bush tax cuts will expire and sequestration kicks in. The crunch might even come later than that, because the parties know that the world will not come to an end on December 31 if Congress fails to make a deal. So it won't be until at least mid-December when we should expect to find out where the parties really stand, and where the parameters of a possible agreement might lie. We could even reach a so-called "impasse" at that time, in which both sides refuse to budge from announced positions. In the meantime, people should understand that we have several rounds of bargaining to go, and that most of what politicians are saying now is not intended to be taken seriously.

Soon, however, it will be time to pay attention. Because what will determine the outcome of these budget negotiations will be the expressed feelings of the American people, and the strength and volume with which the advocates for the Democratic, the Republican, or some in-between positions express their points of view.

If you are afraid the president might give away too much in the negotiations, it's up to you to support the president and Congressional Democrats vociferously. We should have learned from this election that strong support is the best way to strengthen his hand.

2 comments:

  1. Call text write and tell the Democrats that the time is now. Don't let the waiver let them know you are standing beside them and will guide them to the right path.

    ReplyDelete