Friday, April 8, 2011

Government Shutdown & Fun with BATNAs

We approach the prospect of a new federal government shutdown.  Such a shutdown is triggered if Congress and the President cannot agree on how to fund the government going forward.  The costs of a shutdown are significant and basic funding is something Congress does regularly and routinely so it is remarkable to see us coming to close to a "no deal" situation.

I don't pretend to have a solution for the negotiation in Washington, but Negotiation theory offers some useful insights as to why the Republicans and Democrats may fail to reach a deal, and why they're making some of their most recent moves.

While all of our elected officials are dedicated public servants who place the good of their constituents and the nation ahead of all else, political calculations occasionally play just a teeny, tiny role in their decision process.  When contemplating a shutdown (i.e. evaluating their BATNA) the two parties have to predict the reaction of the American people.  Who will catch the majority of the blame?


Some conservatives, particularly those somewhat removed from the fray, remember the Clinton-Gingrich shutdown and are nervous about parallels.  Then too, an emboldened Republican majority in the House pushed hard for their agenda and found to their surprise that a crushing victory in the midterms didn't mean that the American people were on their side when it came to shutting down the government.  Republicans were blamed 2-1 and that confrontation both blunted Gingrich's revolution and likely sealed Clinton's re-election.


At that time Dick Armey pointed out a fundamental vulnerability for Republicans -- the general perception people have about the major parties' views on government.  "It is incongruous to the general public political awareness to think that Democrats would shut down government; Democrats love government. It is perfectly reasonable for them to understand that Republicans shut down government; Republicans don't like government."


Given this, and the obvious parallels between today and 1995, one might be surprised to hear many conservative voices relishing the idea of a shutdown.  Is the situation more favorable than in 1995 or is something else at play?


Even assuming nothing had changed in the objective political calculus, Negotiation theory (particularly where it intersects Behavioral Psychology) offers some possible explanations for why each party might be more willing to face a shutdown than they "should" from a purely rational calculus:

  • Escalation of Commitment.  Negotiators are vulnerable to two psychological needs -- to justify decisions already taken and to "win".  Each one can cause people to escalate prior commitments, such as an assertion that no deal is possible unless the other side makes a specific concession -- along with the other side committing that that concession is impossible!
  • Fixed Pie bias.  People tend to see negotiations as about splitting a fixed pie where whatever is good for you must be bad for me.  This is particularly true when the two parties have a mixed cooperative/adversarial relationship -- come election time, after all, things that are good for one party generally are bad for the other.  This can cause one side to feel that any agreement the other side is willing to take must be a bad deal for them.
  • Egocentrism.  We are naturally biased towards seeing things our own way.  We think our side is fairer and more reasonable than it is, we think our position is stronger than it is and we think our future is rosier than it is.  When polls show a more even perception of blame today than in 1995 this may cause Republicans to seek a fight and may be dismissed by optimistic Democrats.
These three biases (and they aren't the only ones at play!) go a long way towards explaining why Democrats and Republicans might fail to reach agreement.  Of course there are rational explanations for Republican confidence as well.  Polls show the public more divided on how to assign blame than they were in 1995 and support for spending cuts is much higher today than it was then.

With that as background, it's very interesting to see some of the tactical moves currently at play and to ask how they reflect on the lessons of 1995.

One key difference is that Republicans are playing a more nuanced game.  In 1995 the Republicans presented their budget, Clinton refused to sign it and the Republicans took no steps to avoid a shutdown. In particular, they refused to pass a continuing resolution (a temporary funding bill).  This made it relatively easy for Clinton to argue that the Republicans had presented him with an unreasonable demand and been unwilling to compromise.

Today, by contrast, the Republicans have continued to put forward continuing resolutions but have used them as tactical weapons.  They have included cuts and most recently they have included funding for the military for the year even in the event of a shutdown.  The first step forces Democrats to give some ground just to stay at the table and the second improves the Republican's BATNA by making it impossible (if the resolution is passed) for them to be accused of making soldiers fight without pay.

The Republicans have also avoided handing the Democrats an easy rhetorical weapon.  Clinton's victory in the court of public opinion was made much easier by the fact that the Republican budget combined $270 billion in Medicare cuts along with $240 billion in tax cuts, mostly for the wealthy.  Clinton juxtaposed these numbers and argued that the Republicans wanted to use Medicare as "a piggy bank" to fund "huge tax cuts for people who don't really need them".  Michael Takiff argues that Obama can do the same but his examples are much smaller and less clear cut. 

Another difference is that there's a third actor at the table -- the Tea Party.  This new movement changes the political calculus for Republicans significantly.  It may improve their BATNA (polls show that the Tea Party may be seen as the true cause of a shutdown) and it worsens many potential deals -- members from conservative districts have already seen the danger of a primary challenge if the Tea Party decides they aren't conservative enough.

The Tea Party also changes the BATNA for Democrats.  Some Democratic strategists no doubt relish the idea of arguing that the government shut down because the Republican party was held hostage by Tea Party extremists.

What fascinates me are reports that recent stumbling blocks in the negotiation have centered not around spending cuts but around specific policy riders, most notably about Planned Parenthood and the EPA.  How does this fit into the negotiation?  Some of what follows is of necessity speculation, but hopefully we can see a reasonable narrative.

First there is the communication battle.  Both parties would like to shape public perception of why negotiations have not yet reached a deal.  Public support for spending cuts is much stronger than for using a budget crisis to accomplish non-budget objectives.  Hence you have the following contradictory statements:

Schumer: The only reason the numbers aren't solved is because Speaker Boehner knows that if he did that, then everyone would know that it's the riders, and he doesn't want that out. But if you look at how many hours in the rooms of negotiators that discussing riders, it's predominant. The Speaker's folks have admitted that we've been fair on the numbers.
Durbin: At one point we had an agreement on money, even though Boehner denies it. It's hard to believe they would shut down the government because they can't get a vote on family planning and Planned Parenthood. Honest to goodness. Is that what the last election was about? I don't think so.
Boehner: There is no agreement on a number. There are a number of issues that are on the table. Any attempt to try to narrow this down to one or two just would not be accurate.
There have been enough independent reports confirming the importance of the policy riders to consider that likely.  Assuming for the moment that policy riders are the major stumbling block, why might that be the case?
One interesting clue is that insistence on the riders, particularly for defunding Planned Parenthood, is coming not from the Tea Party but from senior Republicans.  These members are closely tied to social conservatives who have expressed increasing frustration that their priorities are being left behind in the name of fiscal conservatism and "setting priorities".  Defunding Planned Parenthood would be a major victory for these groups (and thus for the politicians courting their support) and even if significant compromises are made in the end it may be useful for individual members to have "gone down fighting" against the perceived arch-nemesis of social conservatives, particularly if the compromises leave some symbolic wins on the table -- like forbidding the District of Columbia from using local tax monies to support abortion services.
It's also likely that Democrats are far more willing to play hardball over policy riders than on spending.  Given the current political climate a government shutdown caused by inability to agree on spending cuts is very dangerous for Democrats.  A shutdown caused by Republicans insisting on using the budget crisis to achieve controversial policy goals that are not widely seen as having much to do with the deficit is quite another matter.  Small wonder then that Democrats are pushing this narrative so aggressively.
It will be interesting to see whether the work each side has done to improve its BATNA will result in those BATNAs becoming reality.  We could be hours away from finding out.



3 comments:

  1. Small quibble-
    Your point three is a bit off.

    The House Freshman class of 1994, with their Contract with America, was in many ways very similar as the Tea Party- especially in regards to how they related with the GOP leadership, and Newt in particular.

    Personally, I think that the Tea Party will continue to act as an engine to try and drive the House to shutdown the Government, whereas the GOP leadership is being more tactical, as you point out. In that regard, the current showdown has a much more direct parallel with Clinton-Gingrich confrontation.

    William

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  2. That's fair, but I think the Tea Party is different insofar as it is a more credible threat to put up primary challenges to incumbents. The freshmen Congressmen were similar but I don't think established Republicans had the same concern about losing to a primary challenger.

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  3. They are in Texas. In both state and Federal elections, the Tea Party has been throwing out some severe challenges- including a pretty severe challenge to Rick Perry that was saved by a last minute Palin endorsement. And don't forget Milt Romney- he is facing a severe challenge from Utah Tea Party activists because he's not in line with their way of thinking.

    If Romney can't win Utah, he's through.

    I think that the analogy of the Tea Party with the 1994 freshman class is still pretty apt.

    William

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