Wednesday, December 19, 2012

Budget negotiations

I have a fair amount of experience representing clients in negotiations, and a lot of experience as a mediator as well. What I always have to remind parties in negotiations is 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 that 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 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 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 getting anything other 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 they're not entirely happy about. The alternative is worse.


  1. Dang, Joe, you are a PRO. Excellent article.

  2. Thanks Kevin. I originally posted a version of this on the Daily Kos site, in response to some of the hysteria over there attacking Obama for making concessions in the budget negotiations. How dare he give an inch to those evil Republicans! Didn't he just win the election? That sort of thing.

    It all seems like basic Negotiation 101 to me. But not too many people seem to see it that way. The partisans on both the sides want to blame their leaders for being bad negotiators. But from where I sit, both Boehner and Obama seem like good negotiators. They just have crazy, unrealistic clients. That would be the rest of us!