A Difference of Opinion on Negotiating

by Dave Schuler on December 3, 2012

On the one hand Joe Klein, whom I strongly suspect has never negotiated anything in his entire life, possibly including his own salary, says that asking for the moon in your opening offer is the way negotiation is done:

The Republicans are, reportedly, outraged by President Obama’s opening bid in the fiscal cliff talks. Republicans always seem to be outraged. It’s getting boring. They need to step up and make a counter-offer.

That’s how people negotiate. In this case, they need to be specific about the spending cuts they want. When their specific initial offer is on the table, then you can haggle. (Of course, it’s entirely possible that all this is a smokescreen and actual haggling is taking place privately, between John Boehner and the President.)

I agree with him that the Congressional Republicans should get specific. I disagree that what’s happening is how people negotiate. It’s how unprincipled people negotiate.

Alana Goodman, on the other hand sees it differently:

Presenting a ridiculous first offer — especially after Republicans indicated they were willing to compromise on tax revenues — is not the way to kick off the process. It is the way to insult the recipient, create an adversarial environment, advertise your lack of seriousness, and potentially shut down any hope of reaching a deal acceptable to both sides.

That’s the way to negotiate if your objective is both to ensure you get what you want and to ensure that the other guy doesn’t get anything.

I’d like to see the best possible deal negotiated with the greatest possible likelihood of future agreements. Does what’s happening look to you like the way to accomplish that?

{ 11 comments… read them below or add one }

Andy December 3, 2012 at 8:11 am

Dave,

This is one reason I’m a bit nostalgic for the old smoky rooms days. In private, politicians can do actual negotiation. Negotiation in the public sphere isn’t really possible. That’s why I think these “negotiating” positions are a prelude primarily designed to provide political cover for an eventual compromise.

On the other hand, I could have easily replaced “think” with “hope” in that last sentence. Even so, I think there will be a compromise on the fiscal cliff. I think the second most likely outcome will be that we go over the fiscal cliff first and then there will be compromise which would be applied retroactively.

steve December 3, 2012 at 9:33 am

I agre with Andy, and I am not inclined to believe much said by either party at this time. For example Goodman says the GOP is willing to compromise on tax revenues. I listened to Boehner and I did not hear that. I strongly suspect his “compromise” includes dynamic scoring, so his *00 billion is really something more like 500 billion. Meh. I really don’t know, and neither does anyone else.

I am glad I dont have to negotiate contracts in public. I tell people what I can do, then deliver. I have fewer contracts under my belt than Drew, and they are smaller, but I will have to say that we have been offered some pretty insulting contracts in the past. If it was a place where we really wanted to work, we made a counteroffer and explained our rationale. If it was a place we had misgivings about, we broke off talks.

Steve

michael reynolds December 3, 2012 at 12:41 pm

Simpson-Bowles wanted a trillion IIRC and Obama earlier wanted 1.2 trillion. Now he’s saying 1.6 trillion. That sounds to me like an opening bid when your final objective is 1.2. Not sure why this is outrageous.

I negotiate my own deals. I think of a “Happy Number.” This is the amount that if I get it I’ll shut up, do my work and be happy. But I often start high. And it often works, so that I get my Extra Happy Number. Once we asked for a number that was three times the publisher’s opening offer (because we kind of didn’t want the work) and surprise! They gave it to us. Then: I was happy.

My wife’s approach is to go all Eeyore and ask for something humble. You know what she gets when she does that? An Unhappy Number. On her latest negotiation I stopped her and her agent from asking for lousy money yet again and pushed them to ask instead for her Happy Number. Waiting to see if she gets it.

If you don’t ask, you don’t get.

Asking 1.6 when you want 1.2? Obama’s Happy Number is 75% of what he’s asked for. Again: how is that outrageous?

PD Shaw December 3, 2012 at 2:35 pm

Joe Klein needs to read the story he’s linked to. According to the HuffPost, the Republican complaint wasn’t necessarily that the initial offer was high. Obama made this initial offer back in early November, which was followed by discussions and a counter-offer from the Republicans, all while the White House “staff has been back-channeling flexibility.” And then Obama repeats the initial offer in writing without any recognition of the conversations they’ve had.

The HuffPo opines that Obama’s strategy is in furtherance of a game of chicken, pushing the discussions closer to the fiscal cliff to put pressure on Republicans. That is, he’s not negotiating.

I don’t have a strong objection to a “bold” offer; sometimes in group dynamics or agency-led negotiations, a “bold” offer is necessary to demonstrate that a best case scenario has been attempted. I do believe such a “bold” offer should at least make some attempt to show how or why it should be accepted. I disdain “bold” offers, particularly in captive negotiations, that are couched in terms of non-negotiability, or penalties imposed on future discussions (i.e., that’s my final and best offer and every day that passes will cost you $100 more). You can cow the vulnerable with such gimmicks, but you ultimately are revealed to be a liar to everybody else when you are forced to backtrack.

Dave Schuler December 3, 2012 at 2:46 pm

PD Shaw:

That’s a pretty typical situation when the people you’ve been talking with aren’t decision makers. I can’t tell you how often I’ve advised my clients “don’t waste your time meeting with lower level bureaucrats.”

michael reynolds December 3, 2012 at 4:23 pm

Now the House Republicans have come back with their counter-offer. Mr. Obama wants 1.6 trillion in taxes, Mr. Boehner wants 800 billion. Mr. Obama wants 400 billion in cuts, Mr. Boehner wants 1.4 trillion.

It seems when you toss in Mr. Obama’s stimulus proposals we have a 1.6 trillion deficit reduction (give or take) on the Democratic side and a 2.2 trillion reduction on the Republican side.

If we take both sets of numbers at face value we’re off by 600 billion overall, or 60 billion a year. A big number. But a number that can’t be resolved through negotiation? I don’t see why. The tax portion of that differs by 40 billion a year. Against a 3 and a half trillion dollar budget? Seems pretty minor, really. Split the difference on taxes, bump Obama’s cuts up by another 200 billion and you have 1.8 trillion overall — more than the Dems want, less than the GOP wants, and we can all move on. Right?

michael reynolds December 3, 2012 at 4:26 pm

Sorry, I made leap that I didn’t explain. The tax diff is 80 billion a year unless you assume that Obama’s real happy number is 1.2 T, then it’s 40.

Andy December 3, 2012 at 5:19 pm

Split the difference on taxes, bump Obama’s cuts up by another 200 billion and you have 1.8 trillion overall — more than the Dems want, less than the GOP wants, and we can all move on.

Maybe they can split the difference and come to an agreement. However, we’ll revisit the issue again because 1.8 trillion over 10 years sounds impressive until one considers the projected deficit is somewhere around 10-12 trillion.

Andy December 3, 2012 at 5:22 pm

Or, to put it another way, let’s say we take the President’s 1.6T in taxes and Rep. Boehner’s 1.4T in cuts for a total of 3T. That’s still only about 1/4 to a 1/3 of the total projected deficit.

Dave Schuler December 3, 2012 at 5:23 pm

1.8 trillion over 10 years sounds impressive until one considers the projected deficit is somewhere around 10-12 trillion.

That’s precisely my point. Does what’s happening sound to you like the beginning of a painful, lengthy process? To me it sounds like the final stages of something. If it’s the beginning, what are the next steps?

steve December 3, 2012 at 10:57 pm

“. If it’s the beginning, what are the next steps?”

Stage 2 of health care reform.

Steve

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