Wednesday, January 16, 2013

The Republican Chip No One Is Talking About

I've been trying to think through a little bit about the Game Theory of the Debt Ceiling talks.  Mike Konczal has a nice little primer.  If one knows enough about the players and the politics, there is no reason one couldn't solve a game theory model like the one Konczal presents.  Unfortunately, it isn't easy.  What do the players really want?  What do they believe about each other?  What are their relevant payoffs?  These aren't trivial questions.  Also, the public's response--who they will blame as we approach the deadline in February--will be important and is somewhat uncertain.

That said, there is one thought I keep coming back to that no one else is talking about.  Even if the Administration is committed to not negotiating on the debt ceiling, the public will end up blaming Republicans, and the Republicans will eventually balk.  There is one other chip that Republicans can play (that as far as I know is completely off the table right now).  Republicans can offer up the McConnelll plan that basically puts the debt ceiling in the President's hands (though it allows Congress to complain loudly and officially when it is raised).  The plan would eliminate the debt ceiling game of chicken forever.  Even if the President turns out to be right and the Republicans will pay a large cost as we get closer to the deadline, as the House Republicans realize this, they can always put this plan back on the table.  In itself, it is valuable enough to get some concessions (though what they really would want I don't know).  It's also potentially valuable at breaking the President's resolve.  What if they use this carrot to induce the President back into talks and then talks break down?  Does that make the President complicit in the failure?  Its harder to argue "we don't negotiate with terrorists" after negotiations have just broken down.

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