Monday, December 31, 2012

I got it, you take it.

Most negotiations boil down to getting what you feel is important while sacrificing points that are not as critical.  So if two parties walk away thinking they got what they wanted while letting the other side get something, both parties think they won.  Unfortunately, the devil is in the details and while we live in a digital world, negotiations are analog.  In business to business this can be seen in: “Yes we agree that you should be able to raise prices, but we don’t agree with your formula.” Or in sports it often boils down to incentive clauses, but what performance metrics (points, goals, wins, etc.), what point, and is there a sliding scale.  Often these negotiations are initiated when one side floats a Term Sheet or Memo of Understanding, and if both sides see enough common ground here, formal contract negotiations ensue.
In Washington, we see this in the form of floating ideas to gauge the opposition’s response.  The GOP stuck out its chin talking about eliminating certain tax deductions and when pressed to name some they did and got hammered by Democrats, special interests, and pundits.  When the Democrats say they will increase tax rates on the top earners, the Republicans cry about hurting small businesses and job creators.  This also happens on the spending side of the ledger.  Republicans call for spending cuts, Democrats offer up unspecified cuts and the Republicans reply we won’t agree to tax increases until they see the specific spending cuts.  And when Congress cannot decide on specifics, they kick the can down the road like Adam Vinatieri in Super Bowl XXXVI as seen in this sequestration nonsense.
Throw in the media’s penchant to declare winners and losers and assign blame and voila we have no one really negotiating openly and honestly.  What makes it worse is we are in the middle of a very weak economy and potentially tightrope walking over another recession; a situation that calls for continued fiscal stimulus but long term austerity.  And in our constant state of campaigning more votes are based on political (specifically re-election) repercussions and not about national interests.
You see, we have lost the ability to see what the common goal is and have since focused on the tactics and the nuances.  I would love to ask our 535 legislators and President: What is our #1 economic goal?  Is it debt elimination?  Is it full employment?  Is it a balanced budget?  I know there will be differences in tactics between the political parties and across the political spectrum, but I honestly believe that there are differences in the #1 goal, AND that means we will suffer through dysfunctional governance for a long time.
So these sides need to get together and come up with a long term solution. The Republicans need to accept that we need stimulus in the short term and Democrats need to understand that we long term spending constraints. 
By the way, what should be our number one economic goal?  Start with reducing debt to GDP to 25% by 2040.  But that’s just my opinion.

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