As a candidate, Donald Trump vowed that if elected he would use his business talents to make the best deals for the American people. But as president, Trump’s first foray into dealmaking failed miserably with the demise last week of the Republican plan to repeal and replace Obamacare.
What went wrong? Real estate deals and legislative deals are quite different — and Trump’s business experience is ill-suited for work with Congress. Here’s why.
What is the ‘art of the deal’?
Trump’s book “The Art of the Deal” deals with business negotiations, in which the basic protocol involves alternating offers between negotiating partners. When you want to buy something, you make an offer below the asking price. Then the seller makes a counteroffer, and so on until the two offers converge.
In this process, one of the two parties may say the following. “This is my final offer. Take it or leave it.” If the other party considers the statement credible, she makes the agreement with the terms offered. If not deemed credible, the parties continue to bargain, and the game continues (while the first player has lost his credibility).
A key factor in these negotiations is the existence of “outside options,” alternatives for one of the parties. This is what Trump stresses in his book, claiming that he kept “a lot of balls in the air, because most deals fall out.”
Why legislative deals differ from business deals
In legislative bargaining, alternating offers are not part of the protocol. Nor do outside options exist. Indeed, despite news media suggestions that the president sets the legislative agenda with the State of the Union address, Congress sets its legislative agenda.
If a bill does not pass in Congress, the legislature can take up the initiative again, if it wishes to do so. And the president will most often wait until a bill clearing both chambers reaches his desk before he can sign or veto it. The president cannot directly intervene in the negotiations; whether the legislature is controlled by his party or the other party, he can act only behind the scenes.
Consequently, it makes no sense to say to the other players, “This is your last chance. Take it or leave it.” As a result, if you are the president and you make this statement, you’re not credible. More accurately, you cannot possibly be credible because you do not directly control the agenda.
Think about an alternative outcome on Obamacare repeal, in which House Speaker Paul D. Ryan (R-Wis.) comes back in a month or a year with a new proposal that can pass both chambers. Would anybody expect the president to veto it? If not, what is the meaning of the “take it or leave it” statement?
Further, “outside options” don’t exist in a legislature. The president cannot have several balls in the air. He does not have an alternative Congress. And alternative bills can be formally initiated only by Congress, not the president.
Granted, the president and legislative leaders may negotiate, behind the scenes, about their priorities. And Republicans (at both ends of Pennsylvania Avenue) surely discussed the order in which to introduce items on the agenda, like taxes, the wall, immigration, Obamacare and the environment. Such discussions probably concluded that Obamacare should go first, considering the more than 60 times the Republican House had voted to repeal the Affordable Care Act while Barack Obama was president. The GOP bill’s failure means that Republicans will soon turn to the next item on their agenda.
Trump’s attempt to transpose his business experience directly to politics did not fare well. This is to be expected, because the games are different. You cannot play basketball with a tennis strategy. There’s a reason the games of politics and policy are played by professional politicians. Newcomers have a steep learning curve, as the president is discovering.
George Tsebelis is Anatol Rapoport Collegiate Professor of Political Science at the University of Michigan, Kellogg Institute Guest Scholar, and author of Veto Players: How Political Institutions Work (Princeton University Press, 2002).