A Way Out...

 

"Conquest is not in our principles. It is inconsistent with our government"

 

Thomas Jefferson

 

 

I have mentioned in the past most of my working days were spent as a negotiator. I have been amused, bemused and mostly disgusted in watching the circus in Washington, better known as the "Fiscal Cliff" negotiations. If I was teaching a class on successful negotiations, I would video tape what is going on in Wonderland, and use it as a bad example.

 

There are so many things wrong, I hardly know where to begin. First off, negotiation is the bringing together of two different viewpoints, or positions, to forge a compromised viewpoint which is challenging, yet acceptable to both sides. IT IS NOT A CONQUEST. To go into any negotiation and leave the other side bleeding will lead to one, or a combination, of the following results: 1) the other side will never want to deal with you again 2) if the other side did decide to negotiate with you again, they would be out for blood and revenge 3) the working relationship would be so poisoned, mutual success would be almost impossible.

 

Negotiations are always the best when progress or lack thereof is kept between the negotiation teams. Keep the information close in both teams. DO NOT NEGOTIATE IN THE PRESS. Once agreement is made, all hurdles are cleared, that is the time to shout it from the rooftops.

 

NO NAME CALLING. This is a negotiation, not a battle between two rival street gangs. Do not besmirch the other side by calling names nor castigating negotiation styles or strategies either publicly or privately. Nothing good ever results from this.

 

An old adage in negotiation is this - amatures deadlock, professionals find the deal. In other words, anyone can be a "Doctor No", one who deadlocks a deal. It is true, once in a while you need to walk away from the table. However, that is the exception and not the rule. I loved complex negotiations which looked impossible to solve. Coming up with a deal, while knee deep in tough circumstances, is especially rewarding.

 

If I was asked to help resolve "Fiscal Cliff" issue before the end of the year, the first thing I would tell both sides is this: If a dolt like me knew this was coming over a year ago, the very sharp tacks that work in Washington should have known this also. To start negotiations at five minutes to midnight is malfeasance at best. That being said, there is still a way out for this year. I would structure a contingent deal. In other words, agree with what can be agreed upon now, and do a "bridge" agreement going out to June 30, 2013.

 

Here is the deal until June 30, 2013:

• The tax rates for those under 250K stay the same.
• The tax rates for those over 250K revert back to Clinton era rates.
• AMT goes away forever.
• Marriage penalty goes away forever.
• The tax code will be scrapped and replaced with a much simplified system that only has two brackets. Everyone will pay something in federal taxes. All deductions and credits for everyone are on the table.
• Either restore the payroll tax to what it was or eliminate it. If it is not necessary to fund Social Security, get rid of it. If it is necessary, restore it.
• All entitlement programs which have shown uncontrollable cost growth are on the table for revision. This includes Medicare, Medicaid, Social Security and Obama Care.
• No new regulation will be promulgated without a mutually agreed upon cost impact statement. They all cost money to someone.
• The defense budget may only be cut in areas which do not affect the current threat scenarios. Additional base closings in non-strategic countries are a good example of this. 
• All federal programs will be evaluated for future cost outlays as compared to expected revenues. With some estimations pointing to $100T in unfunded future obligations, unsustainable programs needed to be terminated in 2013 to prevent further debt accumulation.
• The debt ceiling will be temporarily adjusted upward until June 30, 2013.
• FAILURE TO COME UP WITH AGREEMENT ON THE ABOVE BY JUNE 30, 2013, WILL RESULT IN NO AGREEMENT ON ANYTHING. In other words, the debt ceiling would revert back to what is was on December 1, 2012 and ALL Bush tax rates would revert back to Clinton rates.

This is the deal. It would be a "all hands on deck" effort between now and June 30, 2013. However, this is the result of kicking the can down the road time and time again. No trips or golfing for the big guy - he is a part of this also and needs to be focused like a laser beam to ensure success. Nobody said it was going to be easy - however, failure to complete this time around will go beyond easy or hard - it will be disaster.