The US congress may have temporarily averted a disastrous plunge over the fiscal cliff, by agreeing to a last minute deal over tax rises and spending cuts. But all the indications are that the sense of relief all round is just temporary, and this fractious negotiation will continue to defy resolution as a new crisis develops in the Spring. From a negotiating point of view, is there anything which can be done to break this cycle?
After much ill-tempered debate, Congress finally approved a deal in which the top rate of tax rises from 35% to 39.6% on those with incomes exceeding US$400k (US$450k for couples). Income Tax rises for the remainder of the population were avoided, which might have tipped the US back into recession. However, the deal only affects the wealthiest 2% of Americans. Moreover it did not stop the expiry of a temporary cut to payroll taxes for 160 million Americans, which fund social security. Furthermore a decision over more than US$100 billion of scheduled public spending cuts was simply postponed from January 1st to March 1st. In addition, the US debt ceiling of US$16.4 trillion will now need to be raised, setting the scene for a further round of brinkmanship over the coming 8 weeks.
The scenario resembles the game of “chicken” often used by negotiating researchers, in which two cars hurtle towards each other on a single track. There can only be a winner if one driver swerves off the road in order to avoid a collision. In this case enough Republicans in the House of Representatives voted to swerve off the road in order to avoid a crash. But that doesn’t mean they will do the same next time – and if neither driver blinks then a collision which damages both drivers is inevitable.
What negotiation techniques can be deployed to avoid this happening? Three possibilities spring to mind straight away…
1) Firstly, it is often easier to sort out long-standing complicated negotiations by breaking them down into small steps. Maybe the parties could agree to a timetable in which the range of issues they have to address is broken down into a number of smaller steps. First an in-principle agreement on one area of expenditure, then an in-principle agreement on another, then a deal to increase the debt level by no more than a relatively small amount.
When you break issues down into small steps of this kind then they are sometimes less contentious and feel more manageable. The individual small deals can then be stitched together into a bigger solution over-time. When you create a make or break situation over just one, large deal then it puts extra pressure on all participants.
2) Secondly, consider some form of mediation. The negotiation is characterised by partisan adoption of tough positions. There is nobody seemingly available to encourage the two political parties to step-back, look at the consequences of their own position, and take a fresh view of the other negotiators.
The President, whose office of state gives him some of the credentials for mediation that are needed, chooses not to play that role. Instead he has been overtly positional himself– in prime time television interviews, and in his public addresses. According to Times US editor, David Taylor, at a meeting at the White House with the speaker of the House, John Boehner, on December 13th, Obama spoke for 45 of the 50 minutes and warned he would use his inauguration and State of the Union addresses in January to lambast Republicans. These kind of rough-house tactics may have enabled him to get the better of this particular skirmish, but they do not encourage bridge-building.
3) Finally, the issue needs to be re-framed so that both parties feel they are on the same side of the debate. Whilst it is framed as a straight choice between tax rises versus tax cuts, and spending increases versus spending cuts then one party can only win at the other’s expense. The reality is that both parties need the US to control its deficit spending better without blowing a fragile economic recovery off-course. How to go about doing that is an intellectual challenge that should be able to unite Republicans and Democrats around a common problem and enable them to create joint solutions.
Negotiation research shows that jointly crafted solutions tend to last much better than solutions imposed on one party by the other through brinkmanship. After all, having both drivers agree to slow down and move in the same direction is a much more elegant solution to a game of chicken than forcing the other driver off the road and leaving him thirsting for revenge – that is the position the Republicans are in right now and it may yet motivate them to take both cars over the cliff during the next round of this particular negotiation game.