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The White House Needs to Take "Negotiation 101"

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The White House apparently has caved on tax cuts for the super wealthy, despite it drilling another $700 billion hole in the budget deficit. So, the $6.6 billion that would have been generated, just in one year from the $144 billion record bonuses from Wall Street, that could have provided aid to people screwed by Wall Street's machinations, has now vanished.

The White House needs to take a crash course in basic negotiations. I suggest true experts like those from the Harvard (yikes, they may know something!) Negotiation Project, but in case they do not, they can learn something even from an amateur.

Rule #1: You do not concede everything to the other side in one fell swoop. To take a simple example, if I offer you my car for $20,000 and you counter with $16,000, an abrupt move to $18,000 has not "settled" the negotiation halfway. If I countered with $18,000, you would be smart to conclude that the deal will now fall somewhere between $18,000 and $16,000. That is, a new "middle" has been established by my abrupt move, logical though that outcome may have seemed when we were at our initial offers. Of course, anyone can stand pat at any point, but I will have also conveyed to you how much I want to sell my car, or how distasteful I find the negotiating process, not what a wonderful, logical, fair person I am, which is what I might have thought that move would do. In the example, the likelihood is that you would get my car for $16,600 or less.

And, what did the White House convey to Republicans and the country by caving, abruptly, on tax cuts for the super wealthy? [And, one might add, the equivalent, in the above example, of going abruptly to $16,000]

  1. Validated their interpretation of the election results. Did the Republicans ever validate Democrat's interpretation of 2008? Hmmm. Indeed, the majority of Americans think the wealthy SHOULD pay more taxes. That's not why the Democrats lost.
  2. Validated the goofy notion that the billionaire "job-creators" are now going to use the money that could have gone to roads, bridges, high-speed rail, police departments, education, unemployment insurance, to create millions of jobs just because they do not have to pay another 4.6% on their income taxes. Tax cuts for the super wealthy is the least efficient means of achieving economic growth. But, as the economy improves, guess what is going to be credited? And so, the myth will be further baked into what passes for economic policy debate.
  3. Told the world that the US will not do anything meaningful to control its budget deficits. Watch the dollar plummet and the stock market decline.
  4. Most importantly, told the Republicans that the White House can be rolled...and very easily at that.

And, what did the White House get in return?

An agreement not to touch health care reform? Haven't heard that.

An agreement to extend unemployment benefits? Perhaps I just don't have time to watch the news.

An agreement to abolish loopholes while keeping tax rates where they are so that the $700 billion is collected from the super wealthy regardless? Not getting that message.

An agreement to abolish offshore tax havens, abolish deductions for corporations to offshore jobs? Haven't heard about that one either.

What makes the White House believe that, having achieved a bloodless victory, Republicans will settle for less than 100% of what they want when they actually have the majority?

Baffling.