How Not to Negotiate a Tax Deal in Two Easy Steps

Fiscally responsible people everywhere cheer as House Democrats defy Obama and refuse to bring the tax cut deal to the floor for a vote:

Defying President Obama, House Democrats voted Thursday not to bring up the tax package that he negotiated with Republicans in its current form.
"This message today is very simple: That in the form that it was negotiated, it is not acceptable to the House Democratic caucus. It's as simple as that," said Democratic Congressman Chris Van Hollen.

"We will continue to try and work with the White House and our Republican colleagues to try and make sure we do something right for the economy and right for jobs, and a balanced package as we go forward," he said.

The vote comes a day after Vice President Biden made clear to House Democrats behind closed doors that the deal would unravel if any changes were made.

"Wow did the [White House] mishandle this," a senior House Democratic Source told CNN. "Breathtaking. Members have major substantive concerns and they should have gently guided people to the finish line."

Rep. Peter DeFazio of Oregon said: "They said take it or leave it. We left it."

Obviously, I am thrilled with this move, though I'd be infinitely more thrilled if I thought Democrats would stick to their guns and shoot down this whole, excessively expensive, exercise.

But I don't they will stick to their guns, because so much of what I seem to be hearing from the progressive bitter enders is a species of what I like to call the Cartoon Calisthenics of Compromise.  That is to say, you have a lot of people who have never negotiated anything, and seem to feel that you can run a negotiation the way people do in the movies.  These folks have basically two tricks up their sleeves, both of which work better in bad movies about corporate espionage than in an actual negotiation:

1)  Ask for the Moon, You'll Get the Stars  You saw this a lot during health care, and it seems to be surfacing somewhat here.  The idea is that you take a really extreme position, so that you can allow yourself to be negotiated down to what you really want.  So you get people claiming that the administration should have started at single-payer, because then they could have negotiated down to the public option, which would be totally awesome.

While it is true that negotiators often ask for things that they don't want, this cartoon version is really, really stupid.  You can see how stupid it is by asking yourself what would have happened if Republicans had used this tactic?  They could have started by demanding the total abolition of Medicare, and wound up with a massive deregulation of the health care system, right?

Yeah, not so much.  If they'd started with abolishing Medicare, you know what they would have gotten? Nothing.  They would have faced a massive backlash from the public that would have strengthened the hand of their opponents, and given the Democrats a stronger hand in the negotiation that followed.

Similarly, starting with single-payer would have made the average American voter, who (rightly or wrongly) has all sorts of negative preconceptions about single-payer, freak out.  On the tax deal, signaling that you were prepared to veto any tax deal for those over $250,000 would have . . . well, maybe it would have made Republicans back down, as is now claimed.  On the other hand, maybe it would have seriously pissed them off, and made it impossible to pass any legislation at all for the rest of this Congress, including a tax cut for lower-income folks.  And it would have sent the message to average voters that you are willing to sacrifice the tax cuts for them on the altar of your ideology.  Sure, they might have been just as mad at Republicans--but the best case scenario is that you're both worse off.

2)  Convince the Other Side That You're Craaaaaa-aaaaaazzzzy  Big favorite of academics, who I infer have watched a lot of Mel Gibson movies.  Andrew Sabl outlines the argument here:  he defines the question as "how can we change baseline expectations so as to achieve progressive outcomes in future negotiations?"

Kevin Drum notes one of the problems:  you have to actually be able to deliver crazy.  Which even in the best case scenario, the Democrats won't be able to do after December, because their margin for crazy just got unelected.  The credible committment here has a duration of about four hours.

But the broader problem is that convincing the other side that you're totally intransigent doesn't mean you get what you want unless the other side absolutely has to deal with you.  If they have the option of not dealing, convincing them that you're totally intransigent may simply mean that they walk away.  In this case, who loses more if the GOP walks away?  I think that's pretty obvious: Democrats just lost an election by historic margins.  Convincing the GOP (and, not incidentally, the American people) that they're just itching to unleash a bucket of "not on my watch" has higher costs for the Democrats than for the GOP.

And as Kevin notes, the Democratic coalition is significantly more fractured, making it hard for them to deliver crazy in the first place.

Sabl's question seems to me like an incredibly unrealistic one.  It assumes that by really slick application of game theory, progressives can somehow move the dial, so that what negotiations theorists call the ZOPA--the Zone of Possible Agreement--shifts dramatically, making possible much more progressive outcomes than have been realized recently.

But a lot of what professional negotiators do is simply recognize what the limits of the ZOPA are.  They don't waste energy trying to shift it to encompass impossible outcomes.  Immediately after Democrats have lost a midterm election by historic margins (something I believe I may have mentioned) is not a propitious time to be trying to shift the ZOPA leftward.

But even if they were able to shift portside, they still wouldn't be able to get what they're demanding.  That's because the ZOPA they apparently desire seems to be defined less by any positive goal (say, extended unemployment benefits, or a boost to the EITC) than by denying Republicans what they want: an extension of the tax cuts, and a significant easing of the estate tax.

Even given less-than-total-control of the House and Senate, you can imagine a scenario in which the ZOPA is tilted towards the left--one in which Democrats were able to extract bigger boosts in the safety net in exchange for concessions on taxes.  What is simply not possible, no matter how energetically you  perform your Cartoon Calisthenics, is a deal in which the Republicans don't get anything they want.  Yet that is precisely what the progressive opponents of this deal are demanding.  Moreover, they seem to believe that if only Obama were smarter, or meaner, or more strategic, he could deliver the impossible.  They might as well ask him to deliver the moon, and the stars, wrapped up with a big red bow and hauled down their chimney by twelve reindeer.

I think that the House Democrats are better negotiators than this.  Which is why I assume that after a symbolic vote designed to appease the Calisthenics Instructors in their base, they'll cave and pass the deal.  And indeed, according to the Wall Street Journal, that's what everyone else expects too.