THE BLOG
12/15/2010 04:20 pm ET | Updated May 25, 2011

The Tax Cut Deal: Remember Give and Take?

"Did Obama blink on tax cuts?" asked the headline in The Washington Post. More than in the answers, I am intrigued by the question. Is governance really what the article went on to describe as "a high-stakes game of political chicken"? Or was The Washington Post merely pandering to the mood of political polarization that has racked this country for the past three years?

The recent polls on the tax cut compromise indicate the latter: 70 percent of Americans overall and nearly as high a proportion of Democrats support the package. They many not love it, but they support it as preferable to no agreement at all. It is that willingness to accept a solution as good enough -- even if it doesn't satisfy all of one's goals -- that is the essence of a negotiated settlement.

I get so tired of negotiation likened to a game -- in the WaPo headline's case as a staring contest. The analogy is all wrong. A game has no purpose beyond the game itself. It has a clear end point with a winner and a loser determined by an objective scoring system. The people engaging in a game don't have to work together afterward, so you can play as hard as possible.

Negotiation, on the other hand, is a process of give and take, of finding a way to move forward with those with whom you don't fully agree, on the understanding that you are better off working cooperatively than not. I suppose it's understandable that we should have forgotten how it works, given all of the posturing in the guise of negotiation that we've been subjected to over the past few years (recall all the hot air and ultimatums exchanged over health care?). But seeking consensus isn't just insisting loudly on what you want. Rather, all parties must acknowledge that everyone at the table has the right to gain something. It is saying, "I will give you this if you give me that." The result is rarely perfect, but if you do it well you will give away things that matter to you less in order to achieve those that matter more.

This is what happened in the tax cut agreement. President Obama 's uppermost goal was to extend unemployment benefits and the middle-class tax cuts. Although he openly opposed the Bush era tax cuts for the highest incomes as fiscally unsound, that opposition was not as great as his concern that a failure to pass the spending bill would choke off any hope of economic revival in the next year. The Republican leadership, on the other hand, put highest priority on extending tax cuts for high-income households. Although they also want to reduce the deficit, limits on spending are not as central to their beliefs as are limits to taxation. In other words, both sides got their top priorities -- the essence of a good negotiated settlement.

The result may be financially costly, but that is not because anyone blinked, simply that neither side had a sufficiently high interest in fiscal restraint. But that's another issue.

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