Haggling Time

There are people who love street markets abroad and garage sales at home, primarily because they love being able to talk down the price of whatever it is, with elaborate theatrics. You can pretend to be insulted by the high initial price and the shoddy quality of the goods, or offer an impressive sob-story about just not having that kind of money right now – something about a sick mother or having just lost your job, with big tears if you can manage that. You can also try to insult and shame the vendor, or even better, suggest you’re both insiders – you’re both shrewd and cool people, not like everyone else in this miserable crowd – and you both know that florescent painting of Jesus on black velvet is pretty much worthless, but you’ll take it off the guy’s hands for a few bucks so he can move on and find a real sucker, and then offer to point out a few for him.

The variations are endless, as are the variations open to the seller of the crap in question – the item is really unique and rare, really it is, and because he or she kind of likes you they’ll offer you, and you alone, a special price. Appeals to ego always work, as does talk about how everyone has one of these and you surely don’t want to be the only person who doesn’t have one. Insecurity and shame can work wonders – all it takes is getting one whiff of the buyer’s thinly disguised core self-loathing. The seller can also offer a matching sob-story, about how they really have to sell the velvet Jesus at that price, because of their own sick mother or having just lost their job, with their own big tears if they can manage that. That can cut both ways – but in the end someone’s going to get screwed and someone’s going to gloat about having found another real sucker, while counting their money alone in the shade.

It almost goes without saying that the item in question is some bit of useless crap – the seller didn’t want it around anymore and the buyer didn’t really want it in the first place. The whole thing is essentially a winner-take-all game, where what you win is the satisfaction of humiliating that other person who thought they were so smart. This was never about that velvet Jesus at all. This was about dominance and humiliation, and what you win in this game is the indisputable right to sneer and gloat. It’s heady stuff.

Everyone loves this game – but maybe that’s a myth. Yes, it could be said that the American economy, and all of American culture, is built on the notion of all of us selling useless crap to each other and sneering at the fools who bought the three hundred dollar sneakers or the twenty dollar cup of weak coffee, or the amazing mortgage with monthly payments of next to nothing for years and years and years. We are a country of hustlers and slick salesmen, and we love that about ourselves. We get what we want and we want to stick it to the other guy. Still there are those perverse few who figure out what they want or what they need at the moment, look at the price, decide that it’s fair, or close enough, and then simply plunk their money down. Yes, there are people who don’t like haggling, as un-American as that seems – they find the intense process of negotiating a “great deal” tedious and stupid. Look at the price. Buy it or not. They’re no fun at all, and they also undermine the whole idea of free-market capitalism. The intense process of negotiating a “great deal” is what life is all about after all. And after all, the Invisible Hand of Competition will drive down prices and drive up quality and assure no one will really get screwed-over too badly – Adam Smith said so. Karl Marx disagreed.

It’s just that it’s so dreary. Try to buy a car. There’s the sticker price on the window, but that means little. There’s what they’ll offer you for your old beat up car, and you did look up its current Blue Book value, but that also means little. You have to haggle, and then you work out a price – a lump sum or what you’ll be paying monthly for them to take your old car and give you a new one – and then the salesman will tell you he has to have his sales manager approve the deal. That’s when the good-cop bad-cop business begins, because the salesman eventually returns and tells you his sales manager can’t let the new car go at anything like that price. Now the pressure is on you, and yes, you know there was no sales manager and the guy just went out back for a smoke – but you lost any leverage here. You agree to pay more or you walk out – but if you try to walk out the salesman will tug at your sleeve and the whole process with the phantom sales manager will begin again, with the salesman saying he’s really putting his job on the line for you now. You’re supposed to feel grateful and more than a little guilty, which will make you pay more of course. Thus you find yourself in a death spiral of elaborate theatrics, and you do know someone is going to get screwed over – probably you. This accounts for the increasing number of old beat-up cars on the road. The whole business of trying to buy a new one can suck what’s left of your soul right out of you, although there are some people who love every minute of this sort of thing. You find them at garage sales every weekend.

You’ll also find such people eagerly following the current negotiations in Washington about the fiscal cliff – the nutty agreement that the Republicans would allow Obama to raise the debt ceiling once again, as usual, as long as he and the Democrats agreed that in the future we’d not borrow so much money, or actually, that we’d not print so much money to cover the interest payments on what we’d already borrowed by selling treasury notes. Of course any country that controls its own currency can print money forever, with the risk that the value of that currency will decline, which it hasn’t ever done in our case. Still there is that possibility, which scares the living daylights out of Republicans for some reason – so stop spending and stop borrowing and get the damned deficit under control. Democrats have long argued that’s precisely the wrong thing to do with our weak economy. Borrowing costs are at record lows and spending now, spending even borrowed money, will keep the economy going and even help it grow, and once it’s humming again we can work on the deficit. Republicans violently disagreed – keeping the Bush tax cuts in place, especially those that heavily favor millionaires and billionaires, is the only thing that will get the economy humming again – and they suggested a deal. In exchange for letting Obama raise the debt ceiling again, just this once, make so that on the last day of the year, at midnight, all the Bush tax cuts expire, even those that favor the ninety-eight percent of us who aren’t millionaires and billionaires, AND require a twenty percent cut in all government spending on everything, with no exceptions. Each side would face a nightmare of exactly what they didn’t want at all – suddenly higher taxes AND deep and drastic cuts to programs for people in need. This was a fiscal cliff neither side would dare go over, so each side would have to negotiate things, to find a way out of what was essentially a mutual suicide pact. What could go wrong?

Obama agreed to this – he didn’t want the United States to stop paying its bills, to stiff its creditors and essentially declare itself bankrupt. He had to give in. The world’s economy – interlocked by the dollar and held together by the certainty that we alone always made our payments to our creditors – would collapse. The Republicans had him by the short hairs. It was a brilliant move – give in or we’ll make sure the world as we know it ends right now. It worked, and their assumption seemed to be that, when the year drew to a close, Obama would have lost the election and they also would have taken back the majority in the Senate, so that fiscal cliff, that mutual suicide pact, would mean nothing at all. With the House and Senate and the White House they could cut what they didn’t like – all aspects of the social safety net and stuff having to do with science and climate change and all that crap – and heavily fund what they did like – the military and so on – and also reward those millionaires and billionaires with even bigger tax cuts, even if the middle class and below would have to pay much more. There’d be no problem, except that Obama won handily and their predicted takeover of the Senate failed – the Democrats even gained seats there, and ten more seats in the House, although certainly not enough to matter in that body. Thus the problem is that now they actually have to negotiate. They’re the ones sitting in the new car showroom without much leverage. They don’t even have a trade-in.

That means it’s time to haggle, and we are seeing a death spiral of elaborate theatrics. As November draws to a close, Obama is still saying he ran on letting the tax cuts for the top two percent expire so the rich pay a bit more, and, by the way, he won, and, by the way, all the polling shows that two-thirds of the public agrees with this, and has for a year or more. The Republicans have no leverage here. As for cuts to Social Security, Obama says those are off the table – Social Security doesn’t add to the debt, if you know the first thing about accounting – and anyway, the Republicans are the party of angry old white men. The House Republicans have no leverage there either. Millionaires and billionaires may fund their campaigns, but the party rank and file vote. Massive cuts to Medicare seem unlikely too – the idea of moving the eligibility age up to sixty-seven to save big bucks, floated once again, polls badly. More than two thirds of us oppose that, even more than two-thirds of Republicans. This is not a good initial negotiating position.

And here’s where things stood as November ended:

Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal on Thursday to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, $50 billion in immediate stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.

The proposal, loaded with Democratic priorities and short on detailed spending cuts, met strong Republican resistance.

That was a nice way of characterizing Boehner’s negotiating position, which is basically a stance that his side doesn’t have to present any ideas about spending cuts – they can just sits back and say yes or no to whatever Obama thinks up. In fact, they don’t have to do a damned thing – please us or we walk, and then the country goes down the tubes. Propose your cuts and, like the car salesman going out back to talk to his phantom sales manager, Boehner will go back to his House caucus and see what they think – but don’t get your hopes up. This is your problem, not ours:

“The Democrats have yet to get serious about real spending cuts,” Mr. Boehner said after the meeting. “No substantive progress has been made in the talks between the White House and the House over the last two weeks.”

Hey, John, you’re the one who wants massive spending cuts. What is it that you want, exactly? And of course he was called on this in another way:

Amy Brundage, a White House spokeswoman, said: “Right now, the only thing preventing us from reaching a deal that averts the fiscal cliff and avoids a tax hike on 98 percent of Americans is the refusal of Congressional Republicans to ask the very wealthiest individuals to pay higher tax rates. The president has already signed into law over $1 trillion in spending cuts and we remain willing to do tough things to compromise, and it’s time for Republicans in Washington to join the chorus of other voices – from the business community to middle-class Americans across the country – who support a balanced approach that asks more from the wealthiest Americans.”

And then it seems Republican aides said the details of the White House proposal pointed to an arrogant re-elected president who believes he can bully Congress, which is an interesting negotiating strategy. You’re hurting our feelings? Try that when you’re trying to get a good deal on a new car. Still there was other advice:

Former Speaker of the House Newt Gingrich said Wednesday that House Republicans should stop negotiating with President Barack Obama and congressional Democrats on the fiscal cliff, saying that by doing so they give Obama all of the leverage in the talks.

“One of the things I would say to House Republicans is to get a grip,” Gingrich said in a speech at the Ronald Reagan Presidential Library in Simi Valley, Calif.

“They are the majority. They’re not the minority,” he said, enunciating the words as if explaining the concept to someone who did not understand it. “They don’t need to cave in to Obama; they don’t need to form a ‘Surrender Caucus.'”

“So my number one bit of advice to the congressional Republicans is simple: Back out of all of this negotiating with Obama. The president is overwhelmingly dominant in the news media. You start setting up the definition of success finding an agreement with Obama, you just gave Obama the ability to say to you, ‘Not good enough,'” Gingrich said.

That’s the equivalent of just walking out of the showroom, but of course you don’t get the new car if you do, but then Gingrich also went on to say that the fiscal cliff was a manufactured crisis – it was “absolute, total, nonsense.” No one else seems to think so, but Newt is Newt. Would you buy a used car from this man?

The Washington Post’s Ezra Klein has an interesting take on what’s really going on here:

The problem isn’t, as most analysts expected, taxes, where Republicans seem increasingly resigned to new revenue. It’s Medicare. And the particular Medicare problem isn’t that Democrats are refusing the GOP’s proposed Medicare cuts. It’s that Republicans are refusing to name their Medicare cuts.

That goes like this:

Politico quotes a “top Democratic official” who paints the picture simply: “Rob Nabors [the White House negotiator], has been saying: ‘This is what we want on revenues on the down payment. What’s your guys’ ask on the entitlement side?’ And they keep looking back at us and saying: ‘We want you to come up with that and pitch us.’ That’s not going to happen.”

That’s partly politics. If nothing else, Republicans are respectful of Medicare’s political potency. Recall that a core Republican message in both the 2010 and 2012 elections was that Democrats, through Obamacare, were cutting Medicare too much. Republicans, already concerned about their brand, don’t want to rebrand themselves as the party of Medicare cuts.

They have no leverage, and there’s a policy problem too:

The fact is that short of converting the program to a premium support system – a non-starter after they lost the 2012 election – Republicans simply don’t know what they want to do on Medicare.

Scour the various outlets for Democratic policy ideas and you’ll find plenty of proposed Medicare cuts. President Obama’s 2013 budget, for instance, includes hundreds of billions in Medicare cuts (see pages 33-37), and caps the program’s long-term growth at GDP+0.5 percent. More recently, the Center for American Progress released a 46-page proposal for cutting Medicare by almost $400 billion.

Republicans, meanwhile, have focused their energy on a long-term effort to convert Medicare to a premium-support model. Paul Ryan’s 2013 budget kept the Affordable Care Act’s Medicare cuts for the next 10 years and proposed to convert the program to a premium-support model in the future. Mitt Romney’s platform proposed reversing Obamacare’s Medicare cuts and offered a vague framework for converting the program to a premium-support model in the future.

A premium support system is where you get a voucher you can only use to buy commercial for-profit health insurance on the open market, allowing you to haggle to your heart’s content for the best deal possible, just like haggling over the price of a broken lamp or a velvet Jesus at a garage sale. Perhaps the thought is that everyone loves that game of dominance, that winner-take-all game, where what you win is the satisfaction of humiliating that other person who thought they were so smart. The idea that people might simply want basic health insurance at a fair price, that you buy once, not new each year, without haggling over minute details of coverage and exemptions, didn’t seem to occur to Paul Ryan. Maybe it’s an Ayn Rand thing.

Klein is not impressed:

That’s left Republicans in a peculiar negotiating position: They know they want “Medicare reform” – indeed, they frequently identify Medicare reform as the key to their support for a deal – but aside from premium support, they don’t quite know what they mean by it, and they’re afraid to find out.

The solution they’ve come up with, such as it is, is to insist that the Obama administration needs to be the one to propose Medicare cuts. “We accepted this meeting with the expectation that the White House team will bring a specific plan for real spending cuts – because spending cuts that Washington Democrats will accept is what is missing from the balanced approach that the president says he wants,” Boehner spokesman Michael Steel said in regard to the most recent round of talks.

Democrats find this flatly ridiculous: Given that the Obama administration would happily raise taxes without cutting Medicare but that Republicans will only raise taxes if we cut Medicare, it falls on the Republicans to name their price. But behind their negotiating posture is a troubling policy reality: They don’t know what that price is.

That is a problem, and Ed Kilgore adds this:

Add in to that the fact that Republican politicians have been proclaiming themselves the saviors of Medicare since at least 2009, right up to the recent point where champion premium-support advocate Paul Ryan was constantly posing with his mother and other seniors and promising to claw back every dime in Obama “cuts” to the program, and you can see why they don’t want to be first out of the gate with a “reform” proposal.

Truth is the Ryan Budget was and remains the sum and substance of GOP domestic policy preferences. That ain’t happening, a circumstance that flushes years of Republican prevarications and evasions and euphemisms and back-loaded, under-handed assaults on the New Deal/Great Society safety net. So now they are relying on Democrats to propose “entitlement reforms” they can then reluctantly accept as a price for also accepting revenue increases.

I can’t imagine why they for a moment think Obama or congressional Democrats owe them the courtesy of doing their dirty work for them. But that’s where they are until such time as they are forced to acknowledge their whole “we’re saving Medicare” rap was as deep and authentic as Sarah Palin’s “death panel” posts at Facebook.

Maybe we are a nation of hustlers and slick salesmen, simply selling each other crap, and we love that about ourselves – or maybe that’s only Republicans. Or maybe we finally are seeing the death spiral of such elaborate theatrics. Everyone loves haggling, but only over a broken lamp or that velvet Jesus. When it matters, haggling just sucks the soul out of you.

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About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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One Response to Haggling Time

  1. Rick says:

    I’m sort of with Gingrich on all this, but instead of telling it to the Republicans, I’d say it to the Democrats:

    Stop asking Republicans to name their price!

    Obama is doing it again! He’s “pre-negotiating” — making opening offers that give Republicans what he thinks they want before they even ask for it!

    Something I don’t hear anyone discussing in all of this is raising rates on payroll taxes to pay for Medicare (but only after we’re sure that the economy has recovered, of course).

    Did I not see somewhere, or am I imagining it, that most voters say they’d favor that as a way of saving a program they like? So that is what the White House should begin with, not talk of accepting Medicare cuts!

    Sheesh, the way we’re headed right now, we will probably end up with cuts in Medicare benefits, which is exactly what the voters — and presumably the people they voted for — say they don’t want!

    Rick

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