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Deal-making in a polarized Congress

- October 16, 2013

By reaching an 11th-hour deal to raise the debt ceiling and open the government, Congress and the president are now on their way to averting  economic calamity. Washington seems almost inured to just-in-time legislating, but the sausage making this time was particularly ugly, leading bond-rater Fitch to decry the political dysfunction that puts government creditworthiness at risk.  A diagnosis of political dysfunction is spot on.  But absent large-scale electoral change, polarized congressional parties are unlikely to fade away any time soon. In that case, what can we learn more broadly from this sorry episode about how deals get done in polarized times?

First, the final deal brokered by Senate leaders Harry Reid and Mitch McConnell (and ultimately swallowed by Speaker John Boehner) drives home the impact of blame avoidance in propelling parties to the bargaining table. Congressional deals, in short, are possible even in the absence of an ideological sweet spot of policy agreement shared by the parties.  When the consequences of stalemate are deemed unacceptable, anticipation (or evidence) of being blamed for extreme outcomes drives partisans to the table.  Given the heterogeneity of states in comparison to most congressional districts, Senate Republicans proved more electorally vulnerable to a damaged party brand name than their House colleagues.  No surprise then that the deal took shape in the Senate. It took devastating poll results to weaken House GOP leaders’ resolve, ultimately collapsing when the clock ran out on their futile efforts to legislate without Democratic votes.

Second, blame avoidance leads polarized parties to fight a messaging war. The outcome of that battle shapes each party’s power at the bargaining table. The party that believes it is on the right side of public opinion will believe it holds the upper hand in setting the terms of a deal and thus inevitably sees less need to make policy concessions.  By winning the messaging war, Senate Democrats could largely hold their ground in negotiations with Senate Republicans — even given chamber rules that typically require large bipartisan majorities to get anything done.  (To be sure, the need for GOP votes prevented Democrats from dictating the terms of the deal: The parties ultimately split the difference on the length of the debt-limit increase.) The battle over messaging also puts into perspective why the House GOP held out for so long, even as its national support crumbled.  House Republicans largely hail from safe red districts; they believed that they were on the right (literally) side of public opinion at home, even as their reputation among Democrats, independents and even some Republicans collapsed.

Third, brinkmanship is inevitable in polarized times.  Even if a party recognizes that it will lose the messaging battle, leaders cannot throw in the towel before the 11th hour, lest supporters blame them for short-circuiting a potentially “winnable” process.  How else to explain Boehner’s last ditch effort this past Tuesday to preempt the Senate deal?  That said, if you are going to throw a Hail Mary pass, team members should probably wear the same uniform.  Instead, predictable divisions within GOP ranks brought brinkmanship to an end.

Fourth, markets have wised up to Congress’s brinkmanship habits.  Anticipating that Congress would inevitably raise the debt ceiling, markets showed only a tepid reaction this week to the threat of default.  To be sure, we saw nervousness in bond markets as the Treasury came close to hitting its borrowing ceiling.  Still, we are a long way from TARP I: The defeat of the first TARP bill in September 2008 precipitated a market free-fall that forced the parties to the table.  With markets a bit more attuned to how polarized parties legislate, we can no longer count on adverse market reactions to discipline recalcitrant leaders into coming to the table.  This may prove a worrisome development in future episodes of brinkmanship when the blame game delivers a less decisive blow to one party or the other.
Fifth, the final deal is a stark reminder of how polarization can augment the power of the House minority party in congressional deal-making, an entity typically sidelined in chamber politics.  To be sure, Democrats had few procedural means to influence the course of events.  They grasped at the discharge rule, but a successful discharge spearheaded by the minority party requires majority party members to cross party leaders to side with the opposition.  Such disloyalty is unlikely in a period of polarized parties, disarming the threat of discharge.  House rules remain stacked against the minority party.  (Even when the House minority party comes up with a procedural move, the majority party can take that parliamentary right away.)  Still, members of the House minority party can wield considerable power in polarized times by sticking together: By forcing the GOP to shoulder the full burden of building chamber majorities for what proved to be untenable positions, Democrats made plain the divisions within the GOP.  Polarization makes unity easier for the minority, even if it leaves the opposition with few parliamentary tricks up its sleeve.

Finally, let’s state the obvious: This type of legislative deal-making comes at a steep cost to Congress, to party leaders and, ultimately, to the economy.  As Sen. Joe Manchin III noted after the fiscal cliff deal late last year,

“Something has gone terribly wrong when the biggest threat to our American economy is the American Congress.”

Nearly a year later, Manchin’s diagnosis still captures the ills of deal-making in polarized times.