Rethinking Grand Bargaining

Elizabeth Drew's reporting that "the White House and Republican congressional leaders, in private talks, have agreed on the need to try to reach a bipartisan 'grand bargain' over the budget—a sweeping deal that could include entitlements and tax reforms as well as budget reduction" is being, I think, widely misunderstood in the blogosphere. I have had the opportunity, from time to time, to ask senior people in the administration how they envision the long-term fiscal gap being closed. The answer is that they expect a negotiated grand bargain.

And I wouldn't be surprised to learn that congressional Republican leaders say the same thing privately, or even that they privately say the same thing to the White House. After all, key congressional Republicans recently participated in the White House-instigated Simpson-Bowles exercise, which was precisely an effort to reach such a grand bargain. So presumably they do, in fact, agree with the White House that what's needed is a grand bargain. None of that is the same as saying that they're any closer to reaching agreement on a grand bargain than they were the day Simpson-Bowles came out and immediately had its recommendations repudiated by everyone involved.

I actually think the real issue here is that the fetishization of the grand bargain is part of the problem. Explanation and solution below the fold!

The biggest issues with the budget are that the lowest-hanging fruit is the stuff with the toughest interest-group opposition and the public doesn't like to confront the stark choices involved. What happens when you pursue the elite bargain strategy is that first you have to saw off any policy options that are key ideological bugaboos. So you end up proposing a regressing tax increase that isn't a carbon tax, which is insane. And then you present a document that (a) offers something for everyone to hate, and (b) leaves the possibility of just saying "no, let's not do this." The result is that you don't solve the problem.

A much better approach would, I think, be modeled on the idea of arbitration. Like suppose ten years from now faced with continuing paralysis, the failure of the Bayh-Brown Commission, and imminent national bankruptcy, General McMaster reluctantly finds himself leading a coup d'état (at the private urging of Chinese and European leaders) to ensure the bills keep getting paid and the global economy doesn't melt down.* But he wants it to be a friendly coup and has no intention of entrenching military government. So he calls me up and says "hey, Yglesias, you have a lot of impractical pie-in-the-sky ideas—what could be do to create a sustainable budget solution that has democratic legitimacy?"

Thus, my idea: You need not one commission, but two. One, the Red Commission, composed of and staffed by conservatives. The other, the Blue Commission, composed of and staffed by progressives. Both commissions have nine months to develop their proposals. At the end of the nine-month period, the proposals are unveiled and 30 days later there's a plebiscite on which proposal the nation will adopt. Whoever wins, wins has their plan adopted and then there's the whole messy question of re-transitioning to civilian government.** The point of the exercise is that instead of getting "grand bargainy" proposals out of this that everyone hates, you instead get proposals that move from the outside-in. This, I think, gives the commissioners the right incentives. You have to ask yourself not "what's the thing that a Republican Senator is likeliest to agree to" or "what would I do if I were policy dictator" but "what's the best compromise between my dream scenario and my goal of persuading the median voter that I'm right." You'd be challenging each side to put its best ideas forward, instead of its most mealy-mouthed and compromise-y.

* I hope this doesn't happen.

** In practice, very difficult and a good reason to hope we don't have a coup.