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Principle, Prosperity and Politics Drive Federal Budget Negotiations

As the federal budget deadline nears, I am seeking the advice and analysis of some of the country’s most prominent negotiation gurus to illuminate the motivations driving the on-again, off-again bargaining sessions between the Democrats and the GOP.

As Harvard professors Max Bazerman and Deepak Malhotra advise in their must-read Negotiation Genius, before concluding that our negotiation partners (or elected representatives) are crazy or evil, we should be asking ourselves whether they have unknown interests, are operating under hidden constraints, or are ignorant of facts of which we are aware.

These are the issues I’ve asked Adam Galinsky, Professor of Ethics and Decision in Management at the Kellogg School of Management, Northwestern University, to address.

What are the interests driving the federal budget negotiations?

Professor Galinsky: The parties’ interests exist at three levels: principle, prosperity, and politics.

Principle refers to deep seated beliefs about the proper role of government. The Tea Party, for instance, appears to be interested in a smaller government even if reduced government results in temporary hits to the country’s prosperity or the party’s political prospects. They seem more concerned with the principles of cutting the budget and reducing taxes than on their own re-election.

Prosperity refers to current and future economic conditions. Because President Obama is the “steward of the economy” he must be and is focused on how the lack of an agreement will affect the markets.

Politics refers to how the parties’ actions today – their negotiating positions and posturing affect their political fortunes.

Of course, committing to principle and protecting prosperity will have political implications but politics as a primary concern refers to how the parties’ negotiating positions are being perceived by others.

What about Eric Cantor? What is driving his negotiation strategy?

Professor Galinsky: Eric Cantor, as the House Majority Leader, appears to be focused on a hybrid of principles and politics. As the leader of the House Republicans, his political aspirations are tied to the support he receives from fellow GOP representatives.

Cantor hews to principles in part because they are key to his political power. But he also seems to be taking action to highlight his political might by revealing inside information on the negotiations to the press and his party members.

Which “Side” Has the Most Negotiation Power?

Professor Galinsky: As in all negotiations, information and alternatives determine power. What are your alternatives and what happens to your most important interests if you don’t reach a deal?

In this case, Obama appears to have more to lose if no deal is reached. Many Republicans don’t believe they will be hurt politically in the absence of a deal. They see less threat to the country’s prosperity interests because many of them simply don’t believe failing to raise the debt limit will have the catastrophic effect so that many economists predict.

What would you do if you were President?

Professor Galinsky: If I were President Obama, I would push hard on the consequences to our national prosperity if we fail to raise the debt limit.

I would say if we fail to reach a deal, Republicans will have the blood of lost prosperity on their hands. I would push the data demonstrating how rarely tax cuts increase productivity and, given the already low marginal rates, how cuts tend to decrease revenue.

I would point to the widening gap between rich and poor as the best argument for a deal that cuts costs but raises taxes on those who have prospered the most in the past decade. I would stress that a budget doing both would be the fairest route to ensuring principle and prosperity.

That would be good politics.


Victoria Pynchon

Attorney-mediator Victoria Pynchon is a panelist with ADR Services, Inc. Ms. Pynchon was awarded her LL.M Degree in Dispute Resolution from the Straus Institute in May of 2006, after 25 years of complex commercial litigation practice, with sub-specialties in intellectual property, securities fraud, antitrust, insurance coverage, consumer class actions and all… MORE >

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