The Next Debt Ceiling Debate: Too Ugly to Write About

May 16th, 2012 at 8:25 am

This AMs papers are flush with stories about the next debt ceiling war, with R Speaker John Boehner insisting on another fight like the last one.  I can’t bear to write about this yet—this NYT editorial provides a nice summary.  I’ll just point out the following:

–It would obviously be best for the economy—already too shaky—to resolve this sooner than later, but Rep Boehner’s stance precludes that.  We probably don’t bump up against the debt ceiling until February, so I don’t see this particular fight taking shape until after the election.

–The R’s have proved to be impossible to negotiate with over this issue.  After all the self-inflicted pain of the last debacle, they finally agreed upon what became the Budget Control Act.  That created a process that included the supercommittee and the auto-cuts known as sequestration, but now, by dint of their own budget, House R’s have reneged on that agreement.

–Basic game theory, well known to highly advanced academics and mobsters: when dealing with an intractable, unreliable opponent, the side with a) the most leverage, and b) the skills to use that leverage can win.  The administration has such leverage in both the scheduled defense cuts and tax increases.  Stand firm on both counts even if it means facing the fiscal cliff, for to cave is to walk a big step closer to permanence of the Bush tax cuts, to say bye-bye to new revs, to take defense spending off the table, and to say hello to even deeper cuts in discretionary programs to help the least advantaged.

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5 comments in reply to "The Next Debt Ceiling Debate: Too Ugly to Write About"

  1. foosion says:

    -remember when the Rs railed against uncertainty? Now they’re creating it

    -how can you negotiate with someone who doesn’t keep his word?

    -the Rs are more convincing that they’ll blow up the economy, which gives them an advantage. This is generally known as the madman theory of negotiating

    Would the Rs threaten armageddon if they thought Romney will win? Hard to say. Probably not, but they could always reverse course later and count on neither the media nor the public noticing

    Can it be said often enough that you can’t both be in favor of deficit reduction and be in favor of extending the Bush tax cuts forever, at least, not if you want to preserve anything resembling a functioning government. Plus little details like we need spending on education, infrastructure, etc. to grow the economy or that we don’t so much have a deficit problem as a healthcare problem. Without a growing economy, we can’t pay debt and without fixing healthcare we’re doomed.


  2. jonathan says:

    Game theory says more explicitly that when there’s no trust you act in your own interests. In the prisoner dilemma, it means you defect or confess to get the lesser sentence because you must assume the other guy will do the same and that the middle sentence is the likely outcome. It isn’t that you get the best outcome, which is the lightest sentence.

    I’m not sure that game theory has much to say except Obama and the Democrats need to understand their positions very well while assuming irrationality and unreliability. It may be, for example, that the GOP will make noise about compromise down the road and then be unable to deliver publicly because their electoral base makes them unreliable cooperators.

    In most game play, the winning long term strategy is a combination of nice until hurt. The always aggressive play wins in short rounds but loses over time to those who cooperate but who retaliate when betrayed. I’m talking computer simulation. In this case, the GOP has betrayed so the standard game simulation moves to retaliation.


  3. luko says:

    There won’t be a debt ceiling fight if Romney wins. They will all act like the debt ceiling is irrelevant and quickly pass a bill. You know that’s true and what is so maddening about it is they know it’s true as well.


  4. Misaki says:

    But that’s not the Aloha spirit~


  5. Misaki says:

    >and to say hello to even deeper cuts in discretionary programs to help the least advantaged.

    See for example comments on this article:
    http://www.dailymail.co.uk/news/article-2146545/Man-fathered-30-kids-11-different-women-says-needs-break–child-support.html#comments


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