Yesterday, Congress managed to pass legislation avoiding some of the potential negative effects of the so-called "fiscal cliff." Most political analysts are trying to figure out whether this negotiated outcome is a victory for Democrats or Republicans. That is the wrong question to ask. I'm a lawyer and a mediator, so the question I would ask about the outcome of a negotiation like this one is whether the deal is better for each side than the alternative of failing to make a deal. Since the public, as well as the stock market, would have looked very unfavorably on the failure to make a deal, the agreement is clearly a win for both sides. Whether one side or the other gave up more of their original positions to achieve the deal probably reflects the relative political power, in terms of both public opinion, and number of votes in Congress, of each side.
Even though the amount each side needed to concede is primarily determined by their political power, most of the partisans on both left and right seem overly focused on the negotiating tactics of their respective leaders. These Monday morning quarterbacks are too concerned with technique, and fail to recognize the decisive importance of political power.
I happen to think it is usually poor form to second guess the negotiators from your team. When I come home from the supermarket lugging many bags of groceries, and one of my kids asks why I bought this brand of peanut butter instead of another brand, I don't find that a helpful question, and I don't usually appreciate having to justify my choices. When clients or co-counsel ask me whether I asked a witness a question at a deposition that I have already taken, I don't find that kind of question helpful either, because the transcript will show all the questions that were asked, and if I forgot something, there is not much to be done about it after the fact.
Similarly, it drives me a little crazy when people who did not participate in lawsuit settlement negotiations second guess the outcome. These non-participants cannot fully appreciate all of the reasons why the deal turned out the way it did. And there is no point in comparing the deal that was achieved to some other hypothetical deal that some second-guessers on either side think they could have achieved if only their superior negotiating skills had been brought to bear. Even if they think they never would have given up on a particular point, they can't say for sure what the other side would have done in response to that intransigence. Maybe they would not have obtained any deal at all.
Therefore, the only question that should be asked is whether the deal made by the leaders we chose, is better than no deal at all. Considering that the "fiscal cliff" bill passed by a margin of 89-8 in the Senate, the answer to that question would seem rather obvious, at least to about 90% of the members of the Senate. The only bills the Senate passes with that kind of margin are the kinds that declare our love of motherhood, the flag, or apple pie. And in the House, where Republicans have until now stood united in their opposition to any kind of tax increase, we saw 85 Republican members vote to support the package, the final bill passing by the landslide margin of 257-167.
Yesterday we saw some things happen in Washington that we haven't see in a long time. We saw the Speaker of the House bring to the floor a bill that the majority of his caucus does not support. We saw the Republican leadership fracture and the Democratic coalition hold together. We saw a bill to raise taxes pass by a huge margin with broad support from both parties. We saw 85 House Republicans vote to allow the top marginal tax rate to rise, something they previously said they would never do. (I realize they have an argument that because they took this vote the day after all tax rates automatically rose, they actually voted to lower taxes for the majority of Americans. Even so, by allowing restoration of the 39% bracket from the 1990's, they did something that they said they would never do.) We saw capital gains rates go up from 15% to 20%. And we saw Congress act together in a timely manner to prevent potential economic calamity. These are things to appreciate.
A lot of people are worried that this deal did not solve as many problems as we hoped to solve. A lot are worried that we put off some difficult decisions, and will have more difficult battles ahead. Personally, I am cheered whenever I see two groups locked in bitter conflict able to agree about anything. However small and halting that agreement, it can be used as a stepping stone to build larger agreements. Perhaps the most important thing that happened yesterday was that a lot of Republican Congressmen are going to see some rewards from going along with part of the Democratic program. They will have to tune out the loudest elements of their base to recognize that, but they will still probably notice that public opinion of Congress is going to go up a notch, that the stock market soared on today's news, and that the public might start to think that Republicans are not so far out in right field as they thought before. The benefit of all that is that the next time we have a crisis (scheduled for about two months for now), it might just be a little easier to round up some Republican votes for a sensible compromise.