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Mediate.com

Deal or No Deal?

by Joe Markowitz
August 2011

Mediation's Place by Joe Markowitz

Joe Markowitz

We're starting to hear outrage from both the left and the right in response to the debt ceiling deal that leaders of both parties have made on Sunday. We're being assured by the usual gang of pundits that this outrage from the most partisan members on both sides demonstrates that the deal is probably fair. It reminds me of something that a lot of mediators like to say, which is that if both parties are unhappy with a proposed settlement, that probably means that it is fair.

As a mediator, I never like to use that line. Why would I want people to leave unhappy? I prefer to try to persuade parties to a conflict that they should feel good about the settlement they are making. I would rather tell them that I hope they are going to get a good night's sleep, that I hope they feel that a weight has been lifted from their shoulders, and that there is a lot of value in putting a dispute behind them. When I have to resort to logic, I try to persuade people that they should not compare the deal on the table with the deal that they wanted or believe they deserve. The only thing they should be comparing a deal to is the alternative of no deal. What that means is that litigants have to compare the offer being made by the other side, with the alternative of proceeding with a costly and risky lawsuit. They should not compare the offer being made by the other side with what they believe they are entitled to in some ideal system of justice.

In evaluating the debt ceiling deal, politicians and their constituents should compare the deal on the table, not with what either side wanted to achieve in these negotiations--for Republicans bigger spending cuts and a balanced budget amendment, for Democrats some increase in revenues. They have to compare this deal with the alternative of no deal. No deal means the Treasury runs out of cash on Wednesday, and then the President has to decide whether to ignore Congress and unilaterally order the Treasury to borrow more money anyway. And that probably causes a constitutional crisis as well as an economic crisis. Alternatively, the President and the Secretary of the Treasury have to decide to stop issuing checks to a lot of government contractors, federal employees, veterans, seniors, people on disability, and a lot of other people who depend on government checks to live. There are only a small number of Congressmen who actually want to play out either one of those scenarios.

Let's compare that to the deal. The deal prevents a default, and commits Congress to enact some substantial spending cuts and possibly some revenue increases, most of which won't kick in for quite some time, maybe five or ten years from now.

Which means that, even if people don't like the plan for handling these deficit issues in the future, right now this deal is still way better than no deal. The only difficult part is persuading a lot of politicians who have to answer to a lot of very partisan constituents that they have to settle for something different from what they wanted. And why they should be happy about that.

Biography


Joseph C. Markowitz has over 30 years of experience as a business trial lawyer.  He has represented clients ranging from individuals and small businesses to Fortune 500 corporations.  He started practicing with a boutique litigation firm in New York City, then was a partner in a large international firm both in New York then in Los Angeles, then returned to practicing with a small firm and on his own.  In addition to general commercial litigation, Mr. Markowitz has expertise in  intellectual property, employment law, entertainment law, real estate, and bankruptcy litigation.  Mr. Markowitz has managed his own firm since 1994. Mr. Markowitz was trained as a mediator more than 15 years ago, and has conducted a substantial number of mediations as a member of the Mediation Panels in the Los Angeles County Superior Court, the District Court and Bankruptcy Court in  the Central District of California, as well as private mediations.  He has served since 2010 as a board member of the Southern California Mediation Association.   



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