The Lost Art of the Deal

David Super

      If Vice President Vance was sincere this Spring when he reported that negotiations had failed because the Iranians did not accept the U.S. proposal, I have grave doubts about whether he understands even the rudiments of negotiations.  The news media’s credulous statement that “marathon negotiations” had failed after only twenty hours on a single day raised similar questions about the reporters and editors involved.  And the widespread tendency of progressives to insist that all bad outcomes could have been avoided if Democratic leaders would only “just say ‘no’” suggests a level of naivete that will pose a serious obstacle to maintaining the movement’s unity and effectiveness.  Although I am not a scholar of Negotiation, I have participated in, or been close to, a lot of high-stakes legislative (and litigation) deal-making, both successful and failed.  The pervasive misunderstanding of what public policy negotiations involve prompt me to want to survey some of the most egregious errors. 

      Two widespread fallacies are actually the opposites of one another:  negotiation as magic and negotiation as farce.  Diplomacy is no magic elixir that can bridge any gap; many differences are too fundamental, and many parties believe the consequences of refusing a deal are entirely manageable.  Putin has repeatedly insisted that Ukraine cease to exist as an independent country; Ukrainians do not wish to be annihilated and absorbed into a corrupt dictatorship.  No deal is possible.  Most lapses in appropriations result from both parties’ leaders’ beliefs that their adversaries would suffer greater political damage from a partial government shutdown; no sliver-tongued negotiator would get those leaders to accept a deal until actual experience caused their political expectations to converge.  A skilled negotiator can develop rapport with a great many counterparts, but a deal still needs approval by their respective principals. 

      On the other hand, skilled negotiating can obtain far better results than amateurish efforts.  As House Minority Leader, Rep. Nancy Pelosi repeatedly fashioned agreements with then-Speaker John Boehner that advanced Democratic priorities enormously.  She did this by recognizing that the Freedom Caucus had the Speaker boxed in and was refusing to move off their maximalist demands.  By being friendlier than the Freedom Caucus, and slightly more flexible, she gave Speaker Boehner an alternative.  Far from gaining power, the Freedom Caucus’s “just say ‘no’” philosophy empowered their ideological enemies.  Repeatedly.  Rep. Pelosi said “no” a lot, too, but she accurately assessed the limits of her leverage and made a deal when she had extracted all that she could get.  These achievements have gone underappreciated because trumpeting them would have embarrassed Speaker Boehner and closed the door on future such deals.  Much of the loyalty Rep. Pelosi enjoyed from Democratic Members sprang from admiration for her rare negotiating skills.

      Another key element of negotiation is to understand how one’s adversary’s priorities differ from one’s own.  Although reducing all politics to a single left-right scale has become fashionable, that is rarely the case in reality:  priorities are commonly non-linear.  I once obtained some very nice substantive provisions in exchange for agreeing to a silly name change.  In crafting pandemic relief legislation, Republicans wanted bail-outs for big business, bail-outs for small business, and little or no expanded unemployment benefits or aid to state and local governments.  Democrats, in turn, opposed bail-outs for large business, had mixed feelings about bail-outs for small business, and wanted to expand unemployment benefits and inter-governmental aid.  But the fervency with which the parties held these preferences was not at all equal. 

      Republicans were most interested by far in big business; Democrats were most interested by far in expanding unemployment benefits and keeping state and local governments from slashing human services and jobs.  The resulting legislation contained wildly generous bail-outs for big business whose accountability provisions were obviously ineffectual and an expansion of unemployment benefits far more generous than anything that had been seriously proposed earlier as well as the best-designed inter-governmental aid package in recent memory.  The parties worked amicably to craft a sound small business bail-out.

      Critics denounced the big business bail-outs as “corporate welfare” – which of course they were – and condemned Democratic negotiators as incompetent for not insisting on real accountability procedures.  They mostly ignored the unemployment compensation and inter-governmental aid provisions because those were obviously the “right thing to do”, as if their merit ensured their inclusion in the final package.  But Sen. McConnell had not suddenly become a socialist; he had no interest in unemployment compensation, and he knew that Republicans had fared quite well in past public fights over unemployment benefits.  The egregious corporate welfare was the price for the urgently needed unemployment compensation and state and local aid.  Democratic leaders could have publicly condemned the corporate welfare, but that would have prompted Republican leaders to publicly condemn the expanded unemployment compensation.  The result would have been that any future expansions of unemployment benefits would have been much harder to negotiate.    

      Risk aversion drives innumerable business deals and litigation settlements yet somehow many people fail to appreciate how central it is to legislative deal-making.  Legislative deals commonly get made when neither party really knows how a public confrontation would play out.  Critics say “if you had held out, you could have gotten more” – which is true, but it is also true that holding out might have gotten them less, perhaps much less.  The Fall 2025 government shutdown should never have happened:  the Democrats’ message reeked of hostage-taking (“give us the health insurance subsidies we want or we will shut down your government”), and messages like that have regularly failed in past shutdowns.  The more germane message – “we will not agree to a budget deal without statutory guarantees that the President will not impound funding for programs we care about” – was hard to convert into soundbites and thus also likely a loser.  (The President’s subsequent choice to limit disaster aid to red states may have made that argument easier to explain.)  The shutdown occurred because outsider critics not steeped in the history of what arguments have and have not prevailed in past government shutdowns demanded that Democratic leaders “show some backbone”, and the leaders caved to the critics.  Ironically, this showed that the leaders did not have enough backbone as the shutdown hurt both Democrats’ political leverage and the SNAP recipients and others who could not meet their basic needs. 

      Political professionals often recognize risks, or weaknesses in their position, that outsiders cannot see.  I was in negotiations when the Democrats were in the majority but one key Member, with a very progressive public image, had privately told us that he would not support us on the issue if it came to a public fight.  We therefore knew we had to make a deal or we would lose completely.  Fortunately, the Republicans assumed that we had the votes because they could not imagine this Member turning his back on us.  We managed to get far more than we would have in an open fight.  But we could not publicly explain why we made the concessions we did (even now, I am being rather elliptical) because that would have emboldened the Republicans to press harder on that and related issues and potentially alienated us from an ally we needed for other fights.  When Democratic leaders settle for pennies on the dollar, it is often because they know too many of their Members will defect on the next vote to hold the line; when they settle for nickels on the dollar, they strongly suspect that might happen. 

      Perhaps the most aggravating misconception about negotiations is that they are really nothing more than difference-splitting.  By this logic, every time one side makes their position more extreme, they improve the ultimate outcome.  If this were true, one must ask why everyone, including the other side, does not do it and what principle limits how much one can elevate one’s demands.  This would make Sens. Bernie Sanders and Ted Cruz the most effective senators in their respective parties, yet I am guessing most readers have never heard of the Sanders Act or the Cruz Amendment.  Nonetheless, outside critics continually insist that Democrats’ disappointing results stem from their not having demanded enough. 

      In political strategy as in investments, if it sounds too good to be true, it probably is.  Effective negotiation requires some mutual belief in good faith among the negotiators.  When one side demands something that they clearly could never get in an open fight and that appears to have been added to their list in an effort to pull the mid-point in their direction, the other side will insist that that demand be laid to the side before negotiations can begin.  If the first party refuses, their opponent then adds a bad-faith demand of their own and waits for the first party to show that they are serious by proposing to drop the extreme demands from each side at once.  Sometimes making an absurd demand so angers the other side that it raises its price to begin negotiations, perhaps to dropping the absurd demand and conceding something else.  Of course the first party can refuse, but that just postpones the start of meaningful negotiations – which could have been done in other, less insulting, ways.

      Progressives who ridicule assumptions of perfect rationality from conservative economists nonetheless assume that negotiators are perfectly rational.  They are not.  I have blown up negotiations that I needed to succeed because the other side was being too abusive; I have had opponents do the same when they felt I was taking a position in bad faith.   

      This is not to say that low-balling one’s demands is consistently correct, either.  Not infrequently, something very meaningful to you is only mildly objectionable to the other side and can be included in the deal at relatively little cost.  I was once trying to solve a problem and put four fixes of different kinds on the table, hoping one would get through.  The other side absolutely hated one of my ideas; they gave me the other three (which I liked better anyway) to drop the fourth.  But all four of my proposals made sound policy sense in terms persuasive to neutrals and moderates; none insulted the other side’s intelligence or looked like things I could not effectively fight for in public.  And the reason my conceding the one was worth something in exchange is that they thought I could win a fight for it. 

      Much of the Left, and much of the Right, have become so fiercely loyal to their partisan positions that they have lost the ability to understand the other side’s perspective.  Effective negotiation demands precisely that kind of insight.  The more one can see problems through the other side’s eyes, the better one’s chance of designing a proposal that combines viability in an open fight (if it were to come to that) and sufficient tolerability for the other side that the proposal can make it into the final deal.  Yet in many circles, pursuing this sort of understanding is seen as disloyalty or feeble-heartedness. 

      Despite progressives’ current fixation on “what would we do if we had all the power” discussions, the U.S. electorate remains very closely divided.  Republicans have won half of the last two, four, six, eight, and ten presidential elections and have structural advantages in the Senate and the House.  Unless and until we persuade substantially more of the electorate of our principles and program, negotiations will be crucial to making progress.  Some Republicans, such as Sen. Mitch McConnell, are very skilled negotiators; others, such as President Trump, are not.  We can achieve much better results, and avoid unnecessary divisiveness, if we recognize that negotiation is a sophisticated process involving information and inferences that are simply unavailable to outsiders.  Some Democrats really are terrible negotiators – I can think of one well-respected senior Democrat I would not trust to negotiate for my lunch money – but reliably judging a result from the outside is rarely possible except in very extreme cases.   

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