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When to Negotiate

Anyone who has still been following budget negotiations in Congress has no doubt noticed that they have reached another interesting stage. Recall that last summer Congress struck a deal in which Republicans agreed to go along with raising the debt ceiling, in exchange for appointing a super committee to come up with additional debt reduction measures. The deal was that if the super-committee could not agree on such measures, then automatic spending cuts, that were designed to be unpalatable to both sides, would take effect. Well, of course in November the super-committee failed to agree (because Democrats insisted that revenue enhancements be part of the mix, and Republicans refused to consider that), and now Congress is faced with the prospect of automatic spending cuts (a process called sequestration) that neither side especially likes. Republican leaders now suggests we can avoid the automatic cuts to the Defense Department by instituting additional pay freezes and reductions for federal employees. Democrats charge that Republicans are reneging on the deal they made last summer.

So here’s a question for mediators and negotiators. Should the administration and the Congressional Democrats embark on a new series of budget negotiations based on this Republican proposal, or do they hold firm and refuse to negotiate, allowing these unpopular defense cuts to take effect? (I’m not asking which choice represents a better policy; I’m raising a pure question of negotiating strategy. So you just have to assume that if you are advising the Democrats, you are against additional cuts to the federal budget and for raising taxes on the rich, and if you are advising the Republicans, you are against cutting defense, against any kind of tax increase, and for finding additional cuts somewhere else.)

Mediators are prone to advise that seeking a negotiated solution to conflict through a process of interest-based bargaining is always the best course of action. But thinking back to Robert Mnookin’s book Bargaining with the Devil, which I discussed in a previous post, a book that suggests that maybe negotiation is not always the solution, we have to consider that in this particular political conflict, this might be a time when both sides decide–and should decide–that it is in their best interests to fight. Mnookin gives some examples from history, such as whether the Allies should have negotiated with the Nazis, or whether Natan Sharansky should have negotiated with the Soviet government, in both cases concluding that it might have been better to fight. He also recounts examples of negotiations in which he was personally involved. For example, Mnookin helped train members and management of the San Francisco Symphony Orchestra in a newer style of interest-based bargaining that made their contract negotiations the smoothest and least acrimonious ever. Interestingly, however, several years after this highly successful negotiation, the parties reverted to a much more traditional style of labor negotiations characterized by threats, demands and a higher level of hostility. Apparently, the union was just much more comfortable treating management as an adversary rather than as a cooperative bargaining partner.

In politics, as is so often the case with labor negotiations, we are dealing with perpetual conflict, and parties whose raison d’etre consists of struggle against a competing ideology or goal. Even though it seems desirable to get those parties to work together for the common good, we have to accept that most of the time, they would rather try to defeat each other. My guess is that in the current budget negotiations, both sides are going to conclude that this is not a good time to work together to try to reach a consensus solution, even though the public might very well prefer some kind of compromise such as sparing some of the defense cuts in exchange for closing some tax loopholes. This time, both Democrats and Republicans would probably rather fight.

What is different in 2012 from 2011? For one thing, of course, it is an election year. That is never considered a good time to make nice with your adversaries, even when the public says they are disgusted with Congress’s inability to work together to get things done. For another, the threat of the government running up against the debt ceiling is not hanging over the parties’ heads in the same way. And both parties have to answer to their respective bases of supporters that were upset with both parties for the protracted series of negotiations last summer that resulted in a compromise solution that neither side liked very much. Moreover, both sides are dug into positions that would cause them to lose face if they backed down. President Obama has already said he is not going to rescue Congress from this jam. The Republicans in Congress have taken a pledge not to increase taxes. That means the president and the Senate Democrats will probably hold firm this time, insisting that either the defense cuts take effect, or the Republicans go along with some revenue increases. The Republicans can probably be counted on to refuse to agree to anything that sounds like a tax increase.

And then what? Both parties will take their positions to the voters this fall, hoping for increased numbers and a change in the balance of power, but more likely being forced to return to a slightly-reconstituted divided government again. Then maybe next year it will be time to deal.


Joe Markowitz

Joseph C. Markowitz has over 30 years of experience as a business trial lawyer.  He has represented clients ranging from individuals and small businesses to Fortune 500 corporations.  He started practicing with a boutique litigation firm in New York City, then was a partner in a large international firm both… MORE >

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