The Government Shutdown - Lessons in Negotiating

The recent government shutdown has taught the world a few things about politics in Washington. It has also scared more than a few institutional investors with the horrifying prospect of a US debt default. The confrontation has also showed negotiating tactics, as they're presently employed, at both their finest and their worst. The crisis—two crises, actually; the government shutdown fed nicely into the debt ceiling clash—was ultimately about which party in Washington was going to call the shots until the 2014 midterm. If the polls are any guide, the Republicans lost the battle as completely as they possibly could. While Democrats didn't come out particularly well, it’s worth a look at the crisis to see where their negotiating tactics differed.

The first major advantage enjoyed by President Obama and congressional Democrats was that of framing. They knew “Enforce the law” makes a great rallying cry, and the Democrats hardly wavered from it. Republicans, in contrast, clearly did not know their terms at all. The laundry list of demands presented to the White House in September was as long as it was impossible to grant. Paul Ryan-style tax cutting, reducing oversight of businesses, and even approval of the controversial Keystone XL pipeline were all included in the original demands. Not being able to focus on comprehensible objectives left Republicans in the House foundering for a cause. They settled on the Affordable Care Act.

This was popular with the base, but this tactic betrayed a crucial lack of awareness of the opponent. The ACA was President Obama’s signature legislative achievement. If the House Republicans had taken the trouble of imagining themselves in President Obama’s place, they’d have known right away that a repeal, delay, or cut to the legislation with his name on it was off the table to begin with. They also underestimated Senate Majority Leader Reid's willingness to force a showdown. Democrats, on the other hand, knew their opponents very well indeed. It was clear from the beginning that capitulation to these demands would lead to more of the same, which is why the Senate, White House, and House Democrats held the line along with a number of Republicans who resent Tea Party influence.

Negotiating tactics are good to know, but it's also important to know your limits. President Obama showed admirable restraint during the crisis by refusing to consider executive action on the debt ceiling. While he may or may not have meant that he’d sooner see the US default than make good use of his executive authority to issue debt, by refusing to discuss the matter he put to bed any thought that he was feathering his own nest through the affair. He recognized the limits of his mandate and made the necessary adjustments. Republicans, again, failed to learn this and never found the negotiating tactics that would work. They opened by demanding the whole world, pared that down to killing a single bill, and ended by being granted only the enforcement of antifraud measures the President already intended to enforce. They got nothing, in other words.

The contrast between the two parties’ negotiating tactics is informative. The lines between “do this” and “don’t you dare do that” are never as stark in your merger or labor contract negotiation as they were during the late crisis. By studying the massively successful negotiating tactics of incumbent Democrats, and taking Republicans’ negotiating tactics as a primer in what not to do, you'll be better equipped to face down the more subtle give-and-take of business negotiations.

(Photo courtesy of freedigitalphotos.net)