11/20/2009 05:12 am ET Updated May 25, 2011

Basic Bargaining Theory and Health Care Reform

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

Can anyone explain this to me?