StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



First Week Of Great Shutdown of 2013 Went Exactly As Boehner Wanted

07 Oct 2013
Posted by Stan Collender

House Speaker John Boehner (R-OH) pretty much got what he wanted from week 1 of The Great Shutdown of 2013. Boehner demonstrated to his caucus what he was willing to do for it -- allow the government to be shutdown -- and it seems to be very appreciative of his efforts.

For that matter, the White House and congressional Democrats also got what they wanted in week 1. The White House and House and Senate Ds held firm to their no negotiating strategy and appear to be more unified than they've been in years. And the polls showed that, as expected but hardly guaranteed, it is the GOP rather than the Democrats that are being increasingly blamed for the shutdown.

All sides are now in a better position to cut a deal. Boehner, President Obama and Senate Majority Leader Harry Reid (D-NV) have all now amply demonstrated to their respective constituencies that they are indeed the hard asses they wanted them to be. All of the leader are, therefore, are in a better position to convince their colleagues that a shutdown-ending deal is acceptable.

But the irony of the situation is that their hard line positions in week 1 have also made it harder for Boehner, Obama and Reid to come together in week 2.

This is the political version of a classic prisoner's dilemma situation. Each of the participants would do better overall if they worked together. But working together may now be so difficult that it's possible the worst possible outcome -- a longer and more destructive shutdown -- is the result.

For that reason, I see the shutdown lasting at least another week...and two or three more weeks after that are becoming increasingly likely.

I'm also raising the likelihood of the debt ceiling not being raised by October 17 -- the date Treasury says it will be needed -- to 1 in 3 instead of my previous estimate of 1 in 4.

But what can Obama deal?

But what can Obama deal? This isn't quite a Prisoner's Dilemma because it will be repeated again and again unless Obama takes (and sticks to) a hard line now. When the House says "Give us what we want or we'll kill your economy" eventually you have to see if they'll really shoot the hostage.


That should be "Give us what

That should be "Give us what we want or we'll kill OUR economy". It's not like they live in another country or something.


Not to mention

We're talking about a 6-10 week deal. And there's talk now of an even shorter term deal (1-2 weeks) in order to re-open the government so that negotiations on the "longer term" (6-10 week) deal can take place. Either way, we're right back to where we are now before the holidays, and the people demanding concessions now will be demanding new ones then.


Hard asses?

"Boehner, President Obama and Senate Majority Leader Harry Reid (D-NV) have all now amply demonstrated to their respective constituencies that they are indeed the hard asses they wanted them to be."

The Democrats aren't being hard asses. They're just (finally) revving up a tit-for-tat strategy, which is roughly speaking a pretty good one for iterated prisoner's dilemmas.


This is not technically a Prisoner's Dilemma

Sorry to be a pedant, but this is kind of important. The payoff matrix for a classical Prisoner's Dilemma is 2 x 2. But here, because there is a time limit for action, Congress has three options:

  1. Pass a Clean CR.
  2. Pass an Unclean CR.
  3. Do nothing

And the President has two options:

  1. Sign only a clean CR.
  2. Sign anything.

Also, in the Prisoner's Dilemma, the two parties must choose blindly with respect to what the other chooses and cannot communicate; not the case here. In particular, notice that if Congress believes the President will sign anything, then they will not pass a clean bill, period. So that cell (Pass Clean/Sign anything) really doesn't exist.

And, perhaps most importantly right now, in a real Prisoner's Dilemma, the payoffs are fixed in advance and known by both players. Amazingly, there seems to be a problem here in that at least some in Congress actually think they will get a positive payoff if they either do nothing, or pass an unclean bill that the President will not sign. Which is frankly amazing; I really did not consider this possibility at the outset. And, arguably, this is what gives Congress a real option of doing nothing.

And it is the nothing option that really worries me, since it definitely increases the odds that we will default because the president cannot even decide to sign something if there is nothing to sign. (The Do Nothing/Sign Anything cell does not really exist, either.)

I still believe that unbearable pressure will be placed on just enough congressmen to make the right thing happen here, but it will much closer than it needs to be. That said, the analysis does clarify what the two parties should do. The president should cast signing anything but a clean CR as completely not an option. In that case, so long as the Speaker is willing to bring it to a vote, I think enough in Congress know the true payoff matrix to make the best choice.


Optimism

I have to admire your optimism. Yes, we still have a good chance that a debt ceiling increase will happen. (As long as the shutdown is still going, to give the Speaker something to distract the radicals with.)

But the shutdown itself, especially after the debt ceiling increase, is going to run at least a couple of months. It will take that long for any significant portion of the radicals' supporters to move from "Hey, the government shut down and the sky did not fall" to "Wait a minute, this shutdown is hurting me!" Not a couple of weeks; a couple of months.




Recent comments


Advertising


Order from Amazon


Copyright

Creative Commons LicenseThe content of CapitalGainsandGames.com is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License. Need permissions beyond the scope of this license? Please submit a request here.