Negotiating is tough work

Now that we've got ourselves a three-month postponement on the big fiscal questions for the federal government, what are we going to do? We could waste the time like we did all through the spring and summer. If I remember correctly, there weren't many proposals flying around--just the partisan, DOA budgets from each power center (the House, the Senate, the president).

No one went past their first offer, and those first offers were crap. It would be so easy to repeat that approach because it's the easiest approach. Each group stays within the safe confines of their respective bubbles where they are protected from attacks for not being ideologically pure enough.

It's dangerous to venture outside that bubble and make that first concession. The other side will try to pocket your concession and ask for more. That's a reason to stay rigidly with your first offer, which is probably what happened with the supercommittee. The two sides haven't changed much, so maybe that's exactly what will happen this time too.

Reasons To Do It

But maybe not. I heard a report on NPR (sorry, no link) about how the Republicans really want tax reform and entitlement reform. The Dems really want tax increases, which is a problem because it's no-go territory for the GOP. No matter how much the GOP wants tax reform, they probably won't give up tax increases for it unless it can be done in absolute secrecy, which means not at all.

Entitlement reform is more needed, so the GOP may well be willing to up more to get it. Unfortunately, there are huge obstacles to entitlement reform. The first is the unpopularity of cost containment. Nobody has been saying "enough" to healthcare for grandma for the past 40 years, and now it's practically enshrined. The second is that the Dems and the GOP don't agree on the structure for implementing cost containment. Dems want the decisions in the hands of the federal government. The GOP wants to palm off the hard decisions to anyone else--the states, individuals, and intermediaries like insurance companies.

These are such big differences that the conference committee can't bridge them. We might be some small agreements on entitlements, such as chained CPI and higher premiums for the wealthy, but there won't be a major deal. That seems to be what most reporters and pundits are predicting.

Nonetheless, these are important talks. . . because the two sides are finally talking. These are the first substantial talks in two fucking years--the first talks since the supercommittee failed. The whole of 2012 was devoted to campaigning. Most of 2013 was lost as the GOP warred internally over its strategy. So it's a big step for them just to be talking and more than they managed to do for two years.

Congrats to them, and many happy returns.

Image: reaganpluscats.com

Extras.

• A good summary from the Atlantic Wire.
• Who's on the committee. Strangely, it's heavily weighted with senators.
• Barro says sequestration won't go away.
• Barro quotes committee members.
• Why SS Medicare must be reformed but it won't happen.
• Bernstein notes that the GOP wants three wishes, and can't have them all. 
• There's no economic recovery. Maybe this is not connected, but maybe it is.