Tuesday, December 7, 2010

The Game Theory of Deal-Making

The President has announced the framework of his deal on tax cuts, and as I see it there are now four possible outcomes:
1. The deal passes, more or less as is.
2. A stronger version of the deal passes (stronger = more liberal)
3. A weaker version of the deal passes
4. No deal passes.
What, I wonder, are the consequences of each outcome? In order of how obvious I think the answer is:

4: Everyone gets mad at everyone. Liberals are mad at Obama for giving in to Republican rhetorical points, and for failing to get UI extension, DADT repeal, the DREAM Act, etc. Republicans are mad because they don't get their tax cuts. Centrists are mad because the parties have failed to get along with each other.
3: Republicans are gleeful. Democrats are, legitimately, mad as hell, primarily at Obama.
1: Many liberals continue to be very disappointed with Obama; others think it was a pretty good deal, and not any worse than anything we had seen before from him. Republicans are probably reasonably happy.

2: Now here's the question. In this scenario, does Obama get credit? Might there be some way for him to pivot around to the front end of that strengthening effort that would get him some credit? Probably Pelosi and Reid get most of the praise from liberals, and scorn from Republicans. Would this help Obama's standing among liberals at all? Should it? If not, does he have an incentive to cooperate with liberal efforts to sweeten the deal? Should liberals make it clear that, by working the deal into a yet-better shape, Obama can win back some of our support, just to incentivize him to do so? Can we?

And more importantly... how far toward Option #2 can we push the scenario before Republicans pull out and we're back at Option #4? Do we, liberals, prefer Option #1 to Option #4? How far do we have to go toward Option #2 before we do prefer the status quo to Option #4? Is there an overlap where we and Republicans will both be happy enough about the deal to go along with it? If not, what do we do?

(My guess is that there is some room to make the deal better and keep the GOP on board, since this is the one thing they actually care about, and that ultimately Obama will dodge most, but not all, of the criticism he's come in for if the final deal ends up being significantly better than the current one. Sort of like with HCR: when we thought he had just massively bungled the whole thing, lots of liberals got really mad at him; once it passed, the active mutiny died down, but his standing with liberals, especially the liberal "elite," was noticeably diminished.)

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