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Mark Kleiman

Mark Kleiman

Posted: September 21, 2009 12:41 AM

Basic Bargaining Theory and Health Care Reform

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Negotiation theory says that the side that needs to get a bargain done has the edge on the side that doesn't need to get a bargain done.  Right now, the Democrats want a bill to pass, and the Republicans want no bill to pass.  So it's not surprising that the Republicans aren't bargaining in good faith.

If a solidly Democratic bill were to pass under reconciliation, even if it were far from a perfect bill, the balance of negotiating advantage would shift.  So why does everyone write as if reconciliation were an alternative to ordinary legislation rather than a prelude to it?

1.  Health care legislation can avoid a filibuster and pass with 50 votes plus the Vice-President’s tie-breaker if it’s done via the budget reconciliation process.

2.  The Byrd Rule limits what can be done that way; the result would certainly be suboptimal compared to doing the same thing via ordinary legislation.  But that means 60 votes to break a filibuster.  That might be done with only Democratic votes if some Dems who plan to vote against final passage could be convinced that party loyalty ought to dominate their personal policy preferences or electoral calculations.  But that means giving every centrist-to-conservative Democratic Senator veto power.

3.  Basic negotiation theory starts with the question, “What happens if there isn’t a bargain?  How good or bad is that for each side?   In jargon, what is each side’s best alternative to a negotiated agreement (BATNA)?  The worse the BATNA, the stronger the need for a deal, and the weaker the bargaining position.

4.  Right now, the good guys want a bill and the bad guys don’t want a bill.  It’s hard to imagine any bill that’s better for Mitch McConnell than no bill.  So the obvious outcome of bargaining is no deal, or a very, very bad deal for the Democrats.

4.  So the obvious move for the good guys is to use the reconciliation process to make the BATNA better for Democrats, liberals, and the pro-health-reform interest groups better and – equally important – worse for conservatives, Republicans, and the anti-reform interest groups.  Once a bill passes under reconciliation that forbids some of the worst insurance abuses, heavily subsidizes health insurance for the poor and middle-income groups, raises taxes on the rich and on alcohol, and puts a cap on insurance-company executives’ pay, the balance of bargaining advantages reverses itself.  Now it’s the right that needs something else to pass.

5.   In this scenario, reconciliation isn’t a substitute for ordinary legislation but instead a prelude to negotiations about such legislation.  As Al Capone is supposed to have said, “You get more cooperation with a kind word and a gun than with a kind word alone.”

All this seems obvious to me, but all the journalism I see treats reconciliation and ordinary legislation as alternatives, rather than complements.

Can anyone explain this to me?

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