“Terrorists” is probably too strong a word for the subject of this post, but what else do you call people who threaten to do something incredibly destructive if they do not get their way? I’ll use as an example the Republican leaders like Senator Mitch McConnell who are taking advantage of the fact that the government is at the limit of its borrowing capacity as a lever to try to get their way in ongoing budget negotiations. These leaders know that allowing the United States to default on its obligations would not only raise interest rates, which would cost all of us many billions of dollars, but would send such shock waves around the world that we would potentially cause another credit crisis and a severe global economic downturn. They know that this is a trigger they must never pull, yet they will not agree to extend the government’s borrowing authority unless they get more concessions in budget talks.
My point here is not to argue the merits of each side’s budget proposals. Whether we should balance the federal budget by raising taxes or cutting spending or some combination, or whether we should even worry about balancing the budget at all, are not my concerns here. Even though I have a point of view on those questions, and enjoy debating them, I respect all other points of view, and I don’t want the merits of the controversy to distract from a discussion of negotiating tactics. (I save the political argument for my political blog, where I posted a more partisan version of this post.) So let’s put the merits of the dispute to one side, and let’s also put aside any questions about the legitimacy of the tactics the Republicans are using to press their point of view. (For the sake of argument, we can even assume the Republicans’ use of this tactic is highly commendable.) Let’s just take as a given that people often seem ready, even eager, to drive both sides to ruin if they cannot prevail in negotiations. Not only in politics, but also in labor negotiations or international diplomacy, or in the conduct of lawsuits, we frequently encounter adversaries who are quick to threaten a strike or a war or a lawsuit, even though carrying out the threat will probably hurt both sides. The focus of this post is limited to trying to figure out how the opposing party–in the case of the budget negotiations, the Democrats–can deal with those threats.
First, you might try to re-frame the debate. In the example of the budget negotiations, Democrats do not want to be perceived as advocates for borrowing more money, at a time when people are concerned about budget deficits, and allow Republicans to portray themselves as trying to rein in excessive government spending. They will not win that debate. Instead, Democrats might want to talk even more about the importance of honoring the government’s financial obligations. Today for example, Senate Majority Leader Harry Reid put out a statement that goes a long way toward re-framing the debate. In it, Reid talks about the “catastrophic” consequences of defaulting the nation’s debts, and chastises the Republicans for being willing to risk default so as to preserve tax breaks and give-aways for the most privileged individuals and businesses. He also tries to make clear that the Republican plans call for borrowing as much as the Democrats.
In a business or labor negotiation, especially where the opinions of others must be taken into consideration, it is often helpful to re-characterize the concerns of one side so they become more understandable to the other side. The company might try to convey to the union that they are really the ones trying to save jobs, or the union might try to convey to the company that they are the ones who are trying to make the company operate more efficiently.
Second, you can try to persuade your adversary of the adverse consequences to them of the threats they are making. In the budget negotiations, Democrats might try to persuade the Republicans that they will suffer just as much from the failure to make a deal as Democrats would. Natural Republican constituencies such as business owners do not want to see their costs of borrowing increased. They do not want to see the economy tanked for Republican political gain. Refusing to raise the debt ceiling is not just a gun being held to the Democrats’ heads. It is a gun Republicans are holding to their own heads as well.
Showing the other side how self-destructive their threats might prove is a useful device in resolving private disputes as well. In attempting to settle a litigated dispute, it is helpful to get both sides to understand just how expensive it will be to continue to battle it out in court.
Third, you might need to develop a Plan B. In budget negotiations, Republicans seem to have more leverage because they are more willing to risk the consequences of a failure to make a deal than the Democrats. They even perceive some political gain from holding the line. In this year’s budget negotiations, the Treasury and Congressional Democrats might consider formulating a plan for dealing with a failure to raise the debt limit, a plan that would not cause an immediate default, but might cause such delays in government payments to contractors, soldiers, federal employees, and senior citizens that it would cost the Republican side politically if it were allowed to happen. Nobody should want to put Plan B into effect, but Democrats might try to make the Republicans understand that they can live with the consequences of a failure to make a deal, and that failure might be more costly to the Republicans than they realize.
Similarly, in a negotiation over the re-payment of a debt, it can be very useful to let the other side know that you are thinking about filing bankruptcy. Even if that is an alternative you don’t even want to consider, it can serve as a persuasive argument to induce the lender to reduce the payments. It is a paradox of negotiation that in order to make your best deal you might have to show that you are not afraid to walk away from the table. At the same time you want your adversary to become sufficiently invested in the negotiation process that they will be the ones worrying about what would happen to them if they don’t make a deal.
(Cleavon Little in Blazing Saddles)