TREATING A DEBT CEILING NEGOTIATION AS A SIMPLE CHICKEN GAME. In this post from a year and a half ago, I pointed out that the March, 2012 debt crisis was not a simple chicken game. I based this on Dick Weisfelder’s comment that in the real world, context is important and negotiations are much more complicated. The media had presented the negotiations as an exciting chicken game with the only issue being who would blink. This is always appealing to the press because it is exciting, and the negotiators don’t object because it helps rally the troops and avoids questions about backchannel and confidential negotiations. However, it turned out that the March 2012 negotiations were strikingly different from a simple chicken game because after there had been a settlement, it was reported that the parties had quietly been conducting negotiations about a grand bargain (which was not achieved).
In this week’s negotiations, there have been no reports of side discussions. The agreement was on a few procedural points and an agreement to tighten the procedures for giving subsidies. It looks as if the parties have agreed to double down on the issue of the readiness of the health care law. This Wall Street Journal (October 17) graph and article says that: “Over the past six presidential administrations, the debt ceiling has been raised 45 times, usually only when debt levels are dangerously close to the limit.” From this point of view, the “chicken game” can be thought of as a negotiation that is familiar to all parties. The stock markets did not get excited about this one. Despite the drama in the media, perhaps the parties assume that there will always be a peaceful solution.