Congress passed a fiscal cliff deal on Jan. 1, but only after what appeared to be a lot of bickering, name-calling, foot-dragging, at least one obscene outburst, and so much procrastination that it made the entire American government resemble a cranky seventh grader who didn’t want to do his algebra homework. According to Robert Mnookin, a professor at Harvard Law School and director of the Harvard Negotiation Research Project, this isn’t just an example of buffoonish leadership—it’s actually cutthroat bargaining in action. Mnookin talked to Bloomberg Businessweek about the last-minute deal, hard-line Republicans, and why sometimes it’s OK to tell Harry Reid to go f--- himself.
Why did Congress wait until New Year’s Eve to get its you-know-what together?
I was not surprised that nothing happened until the absolute deadline. Given the internal conflicts within each party, especially within the Republicans, it was important for each side to hold out rather firmly until the very last moment to see if they could extract more concessions from the other side.
That was a tactic? Are you sure they’re not just lazy?
It’s not just a tactic, it’s how to bargain in a situation like this.
Let me back up: In most negotiations there are what’s called “distributive issues,” or what size slice of the pie each party gets. Both sides have framed this deal in distributive terms—what will be the upper limit for the extension of the Bush tax cuts? Would the line be drawn at $250,000 or $400,000 or $1 million? But sometimes in complex negotiations like this, there’s an opportunity to expand the pie.
That sounds good. Why didn’t we get a bigger pie?
Something that the Republicans put on the table but then were never very concrete about, because, well, it’s not easy to talk about, was the idea that maybe we could broaden the tax base by eliminating deductions and closing loopholes. I think almost everybody would acknowledge that in theory that would’ve been better.
Yeah, but they never gave specifics.
As soon as you name any specific deductions or exemptions that you’re going to eliminate, there’ll be some very important political stakeholders who’re going to raise a hue and cry. Neither side wanted to risk that.
It’s very important for these negotiations to take place privately and with some degree of secrecy, because otherwise you can’t brainstorm and explore your options without being jumped on by some of your constituents or colleagues.
What’s going on in the House? Everyone is fighting and Boehner can’t rally his Republican troops behind him.
Boehner can be a problem-solver but right now he has a terrible problem with House constituency. Two-thirds of House Republicans voted against the deal. The president had been bargaining with someone who didn’t have the capacity to deliver his own constituents. Given that situation, I think the Obama administration’s ninth-inning strategy was spot-on. They ignored the House and made a deal in the Senate instead. Then they put it to the House for an up-or-down vote. No amendments, they said. You can’t send it back ’cause there’s no time.
So they just forced the House into a corner?
If it weren’t the last moment, I assure you that the House Republicans would’ve changed stuff and sent it back to the Senate. We would have continued the game of chicken infinitely.
But why doesn’t Boehner have control over the House Republicans?
A very high fraction of the Republicans were elected to the House in what’re called safe seats: districts that went squarely for Romney and that will probably lean Republican in the next election, too. They’re not worried about looking bad next to Democrats; they’re worried about being outflanked on the right by another Republican in the next primary, such as a Tea Party member who’s more extreme than them.
But in the end, enough of them voted for the deal anyway. Do you think that’ll happen again when Congress takes up the issue of entitlement cuts?
In any negotiation you’ve got to ask yourself, “What happens if no deal is made?” If no deal was made here, tax rates were going to go up for everybody. The Republican position that they wanted to keep tax rates the same was absolutely untenable in light of that reality. Obama and the Democrats knew that if an acceptable agreement wasn’t reached, the Republicans would get blamed for the tax increase on everybody. They had a real advantage. But in the next round, which is going to focus on cutting expenditures, it’s the Republicans who have a doomsday weapon: the debt ceiling.
Oh no, not the debt ceiling!
The House Republicans have a lot of leverage because if entitlements aren’t cut to their liking they can block an increase in the debt ceiling. And then the government runs out of money. The Obama administration will almost certainly take a lot of blame for that. This is going to be a bitter, hard-nosed bargain.
The House wouldn’t really do that, would they?
It would be crazy to push us off the cliff, but if you’re bargaining with a super hard-liner, you never know. It could happen. Obama is really going to have to address Medicare and Social Security benefits. Of course, that’s going to create some resistance on the Democrat side.
At one point during this whole fiasco, House Speaker John Boehner told Senate Majority Leader Harry Reid, “go f--- yourself” in front of witnesses in the White House lobby. Surely that wasn’t a good negotiation tactic.
Eh, it’s not a good thing but it could’ve been worse. Boehner and Reid don’t have to negotiate that often with each other. At least it wasn’t Mitch McConnell saying that to Reid, they’re both in the Senate. You don’t have to be buddies with the people you negotiate with, although relationships do matter. And when you insult someone, you never know how they’re going to take that. Some people will be insulted for life by that and others will brush it off.