Despite the title, I'm not claiming to speak for the president or divine his thought processes. However, I'd like to lean on Malhotra a bit and take a stab at why President Obama negotiates the way he does.
For those of you who aren't sure what I mean, consider the two year Federal employee pay freeze that president Obama gave up as a concession to Republicans in advance of negotiations with them. Many proponents of the Democratic point of view were dismayed at this, arguing that if the President makes his opening offer closer to the Republicans' position, it'll also push the final compromise further in their direction.
But that's not how negotiation works.
Consider this counter example. Let's say you're negotiating for a house, for which the seller's asking price is $320,000. Would you end up getting a better deal offering $1 than $280,000? The above argument says you would, but clearly that's flawed. If you offered $1, the only way for negotiation to move forward would be if you raised your offer to something more serious. The other alternative would be to walk away.
Let's take a step back and take a look at how negotiations function. There's a bit of terminology to understand. There's the Zone of Possible Agreement (ZOPA) and the walkaway position. Because typically a compromise will not end up more favorable for a party than their Opening Bid, these set the boundaries within which the compromise will end up. For example, in the house price example mentioned above, if I offer $280,000 up front, the seller is not going to say, "Nah, you're offering me too much, how about $270,000?" Nor will I say, "$320,000 looks too cheap, how would you feel about $350,000 instead?" Instead, if I offer $280,000 and he's asking $320,000, the final compromise is probably going to end up at something in between these two values. (Let's assume more complicated procedures, like logrolling, are not in play here. That just muddies up the discussion, and we can consider them later.) My ZOPA is therefore between $280,000 and $320,000 in that scenario. Or if I offered $1 instead, then my ZOPA would be between $1 and $320,000.
Here's a schematic of what I'm describing:
The walkaway positions are included in this diagram. A walkaway position is what a side gets if the negotiation completely collapses. It will be impossible for a side to negotiate past its opponent's walkaway position, because at that point the other side has more to gain by walking away than by agreeing to the compromise at that point. And walking away is always an available option. (So in actuality, the ZOPA relates to an opponent's walkaway position rather than his opening bid, but in this discussion I have made these two the same for side B throughout.)
Okay, now look at the ZOPA carefully. It says nothing about where the compromise will end up, it just says a range of possible positions. Therefore, if we move the Opening Bid for side A further to the right, it doesn't move the compromise further to the right; it only shrinks the ZOPA. This only makes a difference if the compromise would have been far to the left.
With this concept in mind, let's consider the Obama "unilateral gift" opening bid scenario:
I've removed a lot of the text, but the lines that were labeled in the previous image still stand for the same things here.
I've added two new symbols. The dotted green line shows where the Opening Bid for side A was in the first diagram. In this diagram, I have moved it further to the right. This means that Side A has given Side B a unilateral freebie before negotiations begin, while Side B remains where it started. As a consequence, this has reduced the length of the ZOPA.
I've also added two yellowed X's along the black line. Let's say these are hypothetical compromise positions once negotiations have ended, using the first diagram's opening bids. In other words, when Side A's opening bid is back at the dotted line.
The point is this: if the final compromise was destined to end up where the left X is, then this unilateral gift has hurt Side A in the negotiation. If the final compromise was destined to end up where the right X is, however, then the unilateral gift has not necessarily hurt Side A. The unilateral gift gave up the ground where the left X is, so it now the compromise is going to end up further right. But the right X is still well within the ZOPA either way.
So, the extent to which an Opening Bid is closer to the opponent's position only matters, if you believe that the compromise would have ended up close to Side A's opening bid. If the compromise was not destined to be near Side A's opening bid, it doesn't matter as much if Side A gives a gift up front.
In Obama's case, assuming he's Side A, the space between the dotted and solid green lines signifies the two year freeze in Federal employee wages. If he would have been able to win a compromise that got everything he will end up with, plus less than a two year freeze in federal pay, then the left X is appropriate here and he loses out. If that's not reasonable to expect, then the right X is appropriate here.
Okay, all of the above is the basics of my point. Please linger on the above until you can picture the model.
Now, consider a counterargument to what I said above: If Obama gives up something unilaterally, then he loses the ability to trade it for something later. In other words, the space between the dotted and solid green lines could have been spent to buy something, rather than just given away.
Now we have to consider that the black solid line isn't necessarily what people might think it is. Because both sides are arguing about federal employee wages, social security spending, etc., we might be inclined to think that Democrats "win" if all of these things are saved, and Republicans "win" if they're all cut. And in fact, it's true that the supporters of various sides win or lose based on these things--these are things that supporters care about.
But the actual negotiators are considering their own position, not that of their supporters. And in their point of view, that line is electoral: Side A wins if the elected population among their caucus increases; Side B wins if this is true for them instead.
So then the next question is this: how does the negotiators' POV map onto that of their supporters? In other words, is it the case that negotiators (who are elected politicians) are more likely to get elected if they win more concessions for their base in these negotiations?
The answer is probably no. To be fair, there is something to say for momentum, that is to say a discouraged or alienated base is less likely to vote, volunteer, or donate. However, it's hard to argue that something like a two year federal employee freeze would still be in the national memory in two years. In aggregate, it's possible. But to be fair to the situation, we need to step back and take a panoramic view.
The point that political scientists are converging on is that dominant party prospects are based on changes in the economy within the last year of the election. It doesn't matter so much if their base gets candy, it just matters if the economy recovers in the minds of the voters at this point. And this hits moderates and low information voters as well. While arguably the federal employee wage freeze will hurt the economy to some extent because now fewer expected future dollars are at market, a federal shutdown or refusal to increase the debt limit potentially have much more significant risks both to the economy and to the Democratic party's prospects.
So Obama's walkaway position is to walk away from negotiations, let the economy freeze for some period of time, and rally his base. It's not an absolute disaster, but it's risky and fairly scorched-earth. The ZOPA involves making sure the economy stays on track, and buying that with various degrees of cutting social benefits. Because the economy is on track to recover on this point (we can argue about what "recovery" even means later), this is a safer position probably.
The reason Obama has to give concessions just to get a bill to pass, when previously that was not true, is that now the Republicans' walkaway position is to let the bill tank and fire up their base, who is asking for this to happen. Obama has to make the alternative of passing a bill sweeter than the walkaway position.
What about the Republicans? According to the above relationship between economy and elections, they would stand to benefit if the economy goes down. Therefore, it is at least slightly in their favor to let the deal tank. Add that their base is demanding a shutdown. As mentioned above, their walkaway position is therefore to shut it down. But they also stand to lose a great deal from the moderates and low information voters if they get blamed for the shutdown, and history says that they very well might be blamed. In short, Obama's goal is to make the option of turning on their base less painful than walking away and possibly drawing blame for the shut down, so in order to do that he's going to have to give them enough candy concessions (that, as discussed above, probably won't matter two years down the road) that Republicans can go back to their base and say, "We got all these things out of them, so we declare victory" even if they don't shut down the government.
So why did Obama just give them something unilaterally before coming to negotiations? It allowed him to step in front of the Republican posturing--and they would have to posture in any deal that successfully passed in order to be able to go back to their base and claim declare victory. Posturing would normally mean making unreasonably high demands, while claiming Obama isn't being serious on deficit (or other similarly big-tent issue). So Obama can cut them off by defining what a reasonable cut looks like, while at the same time giving them room to go back to the base and claim they have Obama running in fear. While they get their slight boost with their base, Obama meanwhile gets a more solid boost with the entire electorate if, as a result, the economy is better off than it would have been in the walkaway position.
If it works, then it could conceivably move the yellowed X further to the left, even as the solid green right shifts to the right.
We can get to the nitty gritty at this point about whether it's a valid strategy. That's not the point of this particular post. I'm not trying to analyze the odds of success in this strategy versus other, similarly subtle options. But I do want to point out that, by moving the solid green line, it doesn't necessarily move the compromise itself in the same direction.
Here's a link to my blog with more of my analysis: Link