Obama's All-in Compromise Strategy: Does it work?

We all thought we knew how to compromise. You make an offer. Your opponent makes an offer. Your first offer never reveals everything you are prepared to yield. You save that for your final offer.

This style of compromise is based on the idea that there is a middle ground somewhere that will satisfy both parties. This style works well when both sides are evenly matched and the compromise will not harm either party too much. This is the piecemeal style of compromise.

The piecemeal style does not work well at all when one side is much stronger than the other, as when a prosecutor is negotiating with a defendant in a criminal trial. The prosecutor has little to lose in this negotiation. True, a series of lost judgments can harm a prosecutor's career, but he or she must be willing to take that risk because a series of non-decisions can be just as harmful. Besides, a single case ordinarily will not make or break a career.

A defendant in a criminal case frequently has his whole life on the line. Criminal sentences are cruelly harsh these days. Even a first offense can lead to years spent in prison. A second or third conviction can lead to a life behind bars. In one recent case, a defendant was involved in a robbery with two accomplices. The two accomplices pleaded guilty but the defendant, a young man who believed that his two older friends had influenced him to commit a crime, decided to plead not guilty and go to trial. This defendant lost his gamble and the judge sentence him to spend much of his life in prison. Admittedly the judge was extreme in his sentencing, but what's the point of being a judge if you can't throw the book at scofflaws? 

So a criminal defendant is likely to seize at any offer of compromise to avoid a dire outcome. Any offer is likely to be better than what he can expect from a skeptical jury and a mean judge. So our prisons fill up with petty criminals. 

 

The piecemeal style of negotiation is not the only style, however. As an American, I became annoyed with the Turkish bazaar in Istanbul, where the salesman typically starts out with a price three or four times the value of a piece. Once when a tradesman used this approach on me, I simply turned and walked away. He followed me, cutting his price in half several times in succession. But I didn't want to deal with someone like that and I kept on walking.

It turned out that someone else was watching the incident, one of the seller's competitors, or even--who knows?--his boss. This man came an offered to show me better merchandise at his factory, located outside the bazaar. I went with him and bought two items. No bargaining involved, I simply accepted the price offered. I later discovered from my Turkish friend that the price I had gotten was a good one. Maybe not the best possible price, but still a good one.

I would call this the "all-in" style of negotiation. The name comes from tournament poker, where a player cannot wait for a good hand while his pile of chips dwindles. At some point, he will not have enough money to compete with the other bettors. He therefore pushes all his chips into the pot and calls "all in".

Until Barack Obama became president, all negotiations between presidents and the congress were piecemeal negotiations. One party made an offer to compromise, then the other made one, and so on. The result of this style of negotiation was not satisfactory for Obama, however. Frequently, one party may delay a bill by offering one compromise after another in a piecemeal fashion. In the end, the party withdraws its support and the session ends with no action on the bill that seemed so popular at the outset.

Obama saw that the piecemeal style had one big flaw--bills could not be continued on to the next session of Congress. So he tried the all-in strategy. In the health care bill, he offered the same bill that the Republicans had offered the last time the issue had been brought before the congress. He may have believed that the Republicans would simply cave in and accept their own proposal. But he probably realized that the Republicans never intended to pass that proposal and merely used it as a delaying tactic in their piecemeal strategy.

Obama's all-in strategy worked. The Republicans tried to make counteroffers, but they really had nothing else to give. Obama and his congressional allies passed the bill by buying off the few votes he needed to get the bill through the Senate. The all-in strategy essentially stops the clock ticking, preventing delaying tactics, especially if, as on the debt-limit bill, the all-in player refuses to offer any further compromise.

After the 2010 elections, Obama faced an obdurate congress that refused to be intimidated by the all-in strategy. Obama continued this tactic, however, and gained a political advantage by making his Republican opponents appear petty, self-interested, and even stupid. The Republicans countered by passing one meaningless bill after another, hoping the electorate would blame the president for the failure of these bills. After numerous meaningless bills failed to pass the Senate, however, even disinterested voters began to get the idea that the Republicans were not serious about solving problems and governing. 

It remains to be seen whether the all-in style wins in the long run.

Identity Theft and Republican Obstructionism

Recently I had two experiences that brought home to me in a very personal way just how important government regulation is and just how little the Republican Congress cares about ordinary people.

The first experience was an identity theft. Someone got my credit card number and my social security number and tried to make a couple of large purchases. The person failed to gain anything for a curious reason. They gave the credit card company a wrong birth date. The curious part was that they gave the credit card company my actual birth date, but the credit card company had a different, incorrect date. So the credit card company turned them down when they tried to steal some money.

So far, so good, but the credit card company also turned me down when I tried to use my credit card. Of course, I had the actual date of my birth and so they turned down my request. I went to the bank to straighten things out and discovered the only thing I could do was close my bank account and cancel my credit card. The bank then transferred the money from my old account to a new one and sold me identity theft insurance in case the criminals tried again, or someone else got hold of my personal information and tried to defraud the bank again.

This process took me most of an afternoon and scared the life out of me. The perpetrators will never be caught. They didn't take my money but they did take my time and my disturb my peace of mind.

The second experience was even more frightening. I answered the phone and was told by a voice at the other end of the line that I owed the IRS thousands of dollars and a policeman was on his way to arrest me. He offered to help me out if I would send him some money to pay off the debt. Just imagine what you would do if someone told you you were about to be arrested. Even though I knew I owed nothing to the IRS and the whole story was fraudulent, there was still a chance that I might be arrested. I hung up on the con artist and paid him nothing.

I am not an immigrant, and I have a fairly good understanding of the law, but the call upset me. I have a last name that sounds foreign, which may have been why I became a target of this fraud. An undocumented worker, who lives in dread of the police knocking on his or her door, may have been convinced that they had to pay up or be deported.

I decided to report the telephone fraud to the government. I soon discovered that the agency responsible for this type of consumer fraud is the Consumer Protection Agency. I gave them my information and never heard back from them.

The Consumer Protection Agency is a whipping boy for Republicans in congress. They held up approving the President's nomination to head the agency for over a year. They also assured the President that they would never permit Elizabeth Warren to head the agency, even though she was responsible for  getting the agency set up and is one of our foremost experts on consumer fraud.

Consumer fraud is rampant. Identity theft is a very serious issue for the millions of Americans who have been affected by it, sometimes disastrously. If a person gives cash to a con artist, that money is gone. An individual has no way to protect him or herself. None at all. Sure, you can refuse to give money, but you can't prevent someone from stealing your identity. Millions of people recently had their credit accounts hacked when they made a purchase at Target.

The Consumer Protection Agency was created to protect us. The Republicans have tried to make it fail. Their efforts mean that more con artists are making more cons and more consumers are getting fleeced. Much of the money stolen by the con artists is repaid by insurance companies, but we, the consumers, are the ones who end up paying in prices that are increased to pay higher insurance premiums.

There must be some tipping point where the people of this country will get mad enough that the politicians stop playing games and start doing their jobs. I hope it comes soon.

No new tax cuts

Grover Norquist and the Republican Party in DC have banded together in an attempt to stop any new taxes ever. Government requires flexibility, just as our personal finances require flexibility. Individuals need new revenue to counteract unexpected expenses, like a child who needs help in school, or an unemployed person who needs to relocated to find work.

Governments need flexibility to face new challenges as well. In the past few years, the federal government spent large sums of money fighting overseas wars and the so-called War on Drugs at home. The Republican response to these needs has been to borrow more money instead of raising taxes. This resulted in over $4 trillion in new federal debt during the Bush administration. New spending was exacerbated by tax cuts and a severe recession that cut revenues and increased expenditures for programs like unemployment insurance.

During the Obama administration, Republicans have steadfastly refused to raise taxes or increase federal spending to spur economic growth. But taxes have been raised; they're not called taxes, but fees for service or raised penalties for traffic violations. Only taxes on the rich have been forbidden, not cuts in programs that help the poor. So the latest Republican budget has cut $4 billion from SNAP, a program that provides food to the poor. Republicans justify this action, which disproportionately hurts children and the elderly, because they claim--without evidence--that there are abuses in the program.

Progressives have taken a long time to wise up to Republican tactics. The administration has offered to offset tax cuts with spending cuts, but this policy is unwise. Any cuts in revenues, which are sorely needed, will never be replaced under the "no new taxes" program. Therefore, any programs that result in savings to the federal government should not be returned to taxpayers. Instead they should be applied to programs that are hurting the most under current Congressional leadership, programs for the poor and disadvantaged.

It is very difficult to compromise with people who are willing to jeopardize the world economy to get their way. Just as progressives must take a hard line against shenanigans like closing the government and refusing to raise the debt limit, we must also take a hard line against passing any programs favored by the Republicans without a commensurate raise in revenues to pay for them.