Monday, September 19, 2011

Committing to Deficit Reduction Strategies

The Congressional Super Committee was charged with negotiating for deficit reduction and it membership is split evenly between the blue and red teams. It has been clear that, as part of the package, the blue team wants to raise taxes and the red team does not. No one doubts that the leaders of these two teams, President Obama and Speaker Boehner, are giving private instructions to the committee members from their team. So why should these two make public announcements here and here?

Perhaps these are commitment devices. Speaker Boehner can easily go back on a private "line in the sand" spoken to committee members. It is harder for him to repudiate a public statement (though it has been done). So President Obama has to stake out his territory and commit to his version of the deal in which one-third of the amount is from tax increases. Negotiations when both sides commit to intractable positions usually do not end well.

1 comment:

  1. There is no question that no one has liking to increase in tax, it is a general problem. I do Forex trading business where too I don’t want to ever pay anything extra and fortunately thanks to OctaFX broker, I am able to do things well and that’s with their swap free account where I am not required to pay any extra charges which allows me to be successful while there is also 24/5 support service available to help me with everything.