Sunday, December 16, 2012

BATNA, BATNA, Who's Got the BATNA?

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Let's get one thing straight from the start. There is no such thing as a "fiscal cliff." If Congress fails to reach a budget deal by Jan. 1, Jan. 2 will not see the U.S. economy in a state of total meltdown by the 15th, leaving us fighting street battles in "Road Warrior" fashion for food, gasoline and toilet paper.
The phrase "fiscal cliff" is purely a creation of a sensationalist media desperate for some kind of major drama now that the election is over.
And their narrative on the current budget negotiations is as overwrought and ridiculous as the one they stuck to right up until Election Day, the narrative that insisted that it was a "horse race" and that the candidates were "neck and neck," even though President Obama held a solid lead in the Electoral College and had done so for months.
When the media and the politicians talk about the fiscal cliff, what they're describing is a series of tax hikes (actually long-delayed expirations of Bush-era tax cuts) and across-the-board spending cuts that Congress put in place as part of a deal to raise the nation's debt ceiling and keep the country from going into default.
The "logic" apparently ran like this: "Since we're too immature, especially with an election looming, to deal honestly on the budget without grandstanding and preening for the cameras like WWE wrestlers to show primary voters how tough we are, we'll set a bomb to go off after the election if we can't act like grownups."
The tax "hikes" would supposedly be more than the Republicans could bear, and the spending cuts, to both military and domestic spending, would be more than either side could stomach. At least that was the idea.
But it seems that nothing, not even military spending or economic stability, is as precious to the Republican Right as tax breaks for the wealthy. The president, on the other hand, explicitly ran on a platform that called for those tax breaks to end, while tax breaks for the middle class would stay in place.
As you may remember, he won.
People who have studied the art of negotiation talk about analyzing your BATNA, an acronym that stands for "Best Alternative To a Negotiated Agreement." In plain English, analyzing your BATNA means honestly facing the question "What happens if we don't settle this?"
So what happens if we "go over the [mythical] cliff"?
Well, for one thing, taxes on everyone go up - to the same rates they were under President Clinton. There would be, according to the financial newspaper Barron's, "deep, automatic cuts in the defense budget and more than 1,000 other government programs, including Medicare."
The economy might very well slide back into recession, at least temporarily. But here's the thing: According to the Congressional Budget Office, the budget deficit would be reduced by $560 billion.
Wait a minute, I can hear you saying. Isn't reducing the deficit the Most Important Thing in the Whole Wide World? Certainly that's the position the Republicans took during the election.
"If we don't reduce the deficit," they bleat over and over, "we'll end up like Greece! You don't want us to end up like Greece, do you? Greece! Greece! Greece is the word!" (Actually, if it meant I could get a decent souvlaki around here, being a little more like Greece might not be so bad. But I digress.)
So why isn't the Republican BATNA - $560 billion in deficit reduction - acceptable to them? Because, as noted above, this has never really been about deficit reduction above all. This has always been about keeping rich people's taxes low. It's also about saying "no" to the president their shrinking base loves to hate.
In contrast, what's the BATNA for the Democrats? Jan. 1, taxes go up on everyone, including the wealthy.
At which point the House Democrats introduce a revival of just the tax cuts that help the middle class and dare the Republicans to vote against it. If they agree to the cuts, they lose the fight; if they refuse to vote for them because they don't protect the wealthy, they lose the House, possibly forever.
As for those spending cuts, we'll see how much people continue to love the Republicans when they start seeing cuts to programs like college loans and Medicare. I suspect that popular programs will quickly find their way back into the budget, and guess who'll get the credit for that?
In any negotiation, the player that gets hurt least by walking away, the player with the best BATNA, is the one with the power. In this case, that's President Obama and the Democrats.