Wednesday, December 19, 2012

Following the Fiscal Cliff Negotiations

Just a few points:

1. What gets reported from the negotiators is usually part of the negotiations. That is, reporters hear what the negotiators want them to hear. And you can't even assume which way it's slanted (if at all); one of the players may believe it's in his interest to stress how reasonable he's being, or how tough he's being. Doesn't mean it's really true.

2. That might include deliberate trial balloons -- but they usually aren't labeled trial balloons!

3. Advocates on both sides have will generally have a strong incentive to push for more -- to denounce the weakness of the politicians on their side, and emphasize both the cleverness and the outrageousness of those on the other side.

4. The exception to that is that advocates do have an incentive to temper their complaints about being sold out on less-essential items in order to be able to make a better stink if a higher priority is in danger. But even there, the incentives may be murky enough that they don't do it.

5. What's more, advocates may be misinformed or misunderstand the negotiating positions. That is, advocates may not realize that their side will eventually have to give up something of value (if that's the case) and instead of steering their representatives towards the least-objectionable area, they may be equally offended by any potential concession. This may be get even worse because advocates from once side may be entirely clueless about the structure of preferences and intensity on the other side (in other words, advocates on one side may believe that giving up X will buy the same reward as giving up Y, but that can be way off).

6. Even worse: advocates may be misinformed about the underlying substance. In negotiations such as these, there's just so much at play that even relatively well-informed observers may not realize potential trade-offs involved. And not everyone making noise is a relatively well-informed observer. Read things such as Jonathan Cohn's excellent post yesterday with that in mind.

7. Part of the job of the politicians in these things is to teach outside advocates about those things the advocates could be wrong about, but negotiating situation and underlying substance. But at the same time, the politicians could be wrong about any of it, too.

8. Oh, and one more thing: neither outside advocates nor the politicians involved in the talks are necessarily monolithic. There's no official "liberal" position on Social Security or "conservative" position on taxes -- but there are plenty of people who want their position to be the liberal or conservative position on an issue, and will act as if it is.

There's nothing wrong with any of this: politicians and advocates are doing exactly what they should be doing. Well, except for the misinformed part of it, I suppose.

It's just that anyone trying to make sense of what's going on should keep all of it in mind, and attempt to interpret what they read and hear with all of it in mind.


  1. This is an excellent post. You sold it short with "just a few points."

    Too many observers, press and otherwise, want to believe this is either a complete-information game like chess, or a missing-information game with strict rules, like bridge or poker. And that the maximizing strategies can be deduced with a little insight and a little logic.

    In reality, it's a lot closer to Calvinball, with the added wrinkles of collective action and unknown preferences.

  2. While there is much to be said, Jonathan, for your analysis, I do wish there was a little more clarity in our discussion about who has to give up what.

    Those doing the negotiating, and those doing the punditry, really aren't being asked to give up anything at all. It is those being represented.

    Those who live in mansions with manicured lawns have something at stake.

    So do wounded combat veterans, little kids and breakfast programs, elderly folks and Social Security pensions, teachers, police officers, Medicare recipients: you know, those not living in the sort of economic security critics take for granted.

    "It's only fair for everyone to sacrifice" or "Both sides should give up something" are points that assume that those affected should be regarded abstractions.

  3. I do like seeing these two headlines in my news feed:

    "White House threatens veto of GOP budget plan"
    "Obama: He and Boehner 'pretty close' to a deal"

    In case you're curious, both are AP articles written by the same journalist. I'm just not sure the headline editor was the same!


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