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Monthly Archives: December 2012

I just was asked an eminently logical question:  The President and the Speaker were so close to a deal.  The differences in their numbers for revenues and spending cuts were small.  Divided by ten (for the ten years likely to be covered by any deal), they were even smaller.  Why have the talks taken the current apparent turn onto a siding that by all appearances is a dead end?  Why can’t they get to yes?  Here is my try at an answer.

From the most optimistic perspective:  The President and the Speaker are figuratively negotiating in a closed room, on behalf of the members of their respective political bases who are waiting outside.  To achieve any form of agreement, the President and the Speaker must compromise their positions.  But to satisfy their political bases that the compromise is the best deal possible, the principals must negotiate right up to (or beyond) the deadline, and then walk out of the room with blood on their brows.  (People who have negotiated trade agreements have told me that the bargaining always runs beyond the deadline, as much for this reason as for any substantive issues that might arise.)  If this is the operative consideration, then expect the room to remain closed for some time, possibly into January, before the exhausted and battered negotiators come from the room to declare “victory” to their inevitably unhappy, but hopefully marginally satisfied, troops.

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When I left the Office of Management and Budget after eight years, I e-mailed all my colleagues (then and still among the best public servants in the country) that after all of that experience and hard work, I had the OMB thing nailed.  If you want to be successful here, I told them, just follow two simple rules:

  1. Don’t sweat the small stuff; and
  2. The devil is in the details.

Similarly today, if you believe some of the commentary about what appears to be an impending budget deal to forestall the “fiscal cliff,” our elected policymakers should follow just two simple rules:

  1. Get a deal that does as much as you can; and
  2. A bad deal is worse than no deal.

Clearly enough, in this instance as well as the earlier one, you have to choose your rule.  And in this instance, I vote for rule number one – noting that it is not the end of the story.

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There are still optimists in Washington.  Many of them probably lean on the old adage attributed (probably wrongly) to Winston Churchill about “…after all of the other possibilities.”  But we are running out of time, so we had better begin to discard those other possibilities at a faster rate.

One of the “other possibilities” would be the President’s insistence on increasing tax rates in the highest brackets of the income tax schedule.  The President isn’t alone in this focus on tax rates; Nate Silver of the New York Times, who earned plaudits for the accuracy of his analysis of the presidential race this year, weighed in along the same lines on a rumored congressional proposal.

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Depending on to whom you are inclined to listen, the fiscal cliff negotiations are either popping like Vesuvius or winding their way steadily toward a successful conclusion.

The negative stories are easy to find.  Discussions between the two sides has become acrimonious.

https://i1.wp.com/upload.wikimedia.org/wikipedia/commons/thumb/1/1c/Roulette_-_detail.jpg/280px-Roulette_-_detail.jpgThe President put forward a proposal that entails substantial up-front tax increases (that is, failure to extend the expiring 2001 and 2003 tax cuts for upper-income people) along with smaller and not-yet-specified future spending cuts.  His proposal includes a permanent change in the handling of the debt limit, making increases automatic unless negated by the Congress, but with that negation subject to a Presidential legislative veto that can be overturned by the Congress only with a two-thirds vote of both chambers.  Republicans are upset on all counts. With virtually no spending restraint on the table with the President’s fingerprints, Democrats exult in that Republicans are more likely to need to specify what they want, and therefore to take responsibility.

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