Know when to walk away

17 November 2010

One of the most important things I learned, reading about negotiation theory, is the acronym “BATNA”.

BATNA stands for Best Alternative To a Negotiated Agreement. For example, if you are currently employed, are offered another job, and start negotiating your new salary, your BATNA is to keep your current job. If you are trying to negotiate a salary while your unemployment-insurance clock is ticking away, your BATNA is to hope to find a better offer before that clock runs out. All other factors being equal, which circumstances give you a stronger negotiating position? That’s the power of BATNA.

I mention this because a package of tax cuts, passed during the Bush Administration, is scheduled to expire at the end of 2010. (They are expiring because the Republicans of that era, in order to make the tax cuts filibuster-proof, passed them under the reconciliation rules.) Republicans, since before Obama was elected, have wanted to make those cuts permanent. President Obama wants to make the cuts permanent for the “middle class” (which is to say, families making under $250K per year, which is to say, the bottom 98% of the US income distribution) but not for everyone else.

The BATNA, in this case, is that income tax rates, across the board, will return to Clinton-era levels, and estates over $1,000,000 will become taxable again. In such a case, Democrats’ talking points can practically write themselves: “We want to keep your taxes low, but the obstructionist Republicans in Congress are holding your tax cuts hostage, because in spite of all their talk about fiscal responsibility, they want to preserve tax cuts for millionaires.”

I cannot think of any legislative controversy, likely to come up over the next two years, where the Democrats will have a stronger negotiating position. And given this leverage, what do we see?

• David Axelrod, Obama’s chief political adviser, is willing to extend “middle class” tax cuts permanently, and let the upper-class cuts continue for another couple of years. He justified this by saying “we have to deal with the world as we find it”.
• House Speaker Nancy Pelosi (who, in January, will become the House Minority Leader), appears to reject this compromise. The Congressional Progressive Caucus stands with her.
• Representative David Camp (R-Michigan), who will be Ways and Means Committee chairman, doesn’t like the Obama compromise, either.

The Democrats, over the last few years, have a shown a distressing tendency to prepare for conflict by postponing it, as if the party astrologer had assured them that in a few months the stars will be better-aligned for victory. (That is why health care reform passed 2010, rather than in 2009.) I hope Pelosi can rally enough other Democrats to their side to prevent this from happening again. May the Democratic leaders have the courage to look their Republican counterparts in the eye and say, “Go ahead. Vote against a middle-class tax cut. Make our day.”

• Later: Infosec: the early years
• Earlier: Informado neniam malutilas