Showing posts with label credit rating downgrade. Show all posts
Showing posts with label credit rating downgrade. Show all posts

Thursday, November 10, 2011

What We Have Here is a Failure to Negotiate


By Alan Caruba

In the movie, “Cool Hand Luke” the warden of a prison camp utters the now famous line, “What we have here is a failure to communicate.” The decision of the Democratic members of the Congressional Super Committee to refuse further discussion of revenue issues is a failure to negotiate.

I have a friend, Jim Camp, who is one of the world’s authorities on negotiation, a coach to international corporations and others that engage in multi-million dollar deals requiring major negotiation skills. When the news was reported on Wednesday that the Democratic members had walked away from the negotiation table, I picked up the phone to ask for his reaction.

“We live in an era when the conventional wisdom is that compromise is the goal,” said Camp. “The real goal is a valid mission and purpose. What’s missing is that the committee as a whole is not focused on the real mission which is the best result for the American people and the nation. Instead, their goal is political gamesmanship, a massive over-reach by both parties to the negotiation.”

Based on more than twenty years of coaching negotiations, Camp said "Tactics do nothing more than create conflict." The news media reports on tactics, but Camp said “Neither party is negotiating to the benefit of the American people.”

What is at stake? It’s not whether Democrats or Republicans “win” the Super Committee negotiation.

Created under the Budget act of 2011, the law was passed the first two days of August when the nation’s $14.294 trillion debt ceiling was raised to avoid a potential national default. It was the fourth increase of the mandatory borrowing cap during President Obama’s first term; one that saw the first down-grade of the nation’s top credit rating in its history.

Consisting of six members each from the House and Senate, evenly divided between Republicans and Democrats, the official name for the Super Committee is the Joint Select Committee on Deficit Reduction. The amount of debt is comparable to the annual Gross Domestic Product, meaning that every dollar the economy earns is equal to the amount of debt that exists.

In the basic terms, Democrats want to raise revenue through taxation to address the debt and permit for more spending. Republicans have committed themselves to avoid such an increase during a period of recession.

The decision to walk away from the negotiation reflects one of Camp’s major warnings. “To act according to how you think the other side will react to you and your actions creates great conflict. To think you know what someone is going to do or say based on how you impact them is to attempt suicide.”

It would be naive to think that the Democrat and Republican members of the Super Committee are not negotiating with an eye on the 2012 elections. As a November 10 Wall Street Journal editorial notes, Republicans have offered a plan "to raise revenues by $500 billion over 10 years as part of a tax reform that would lock in lower rates in return for giving up deductions. Democrats have rejected it, which is puzzling since it would achieve so many of their stated goals."

Refusing to negotiate makes sense only if Democrats are positioning themselves to blame the Republicans for the failure to avoid another potential down-grade of the nation's credit rating. It's not the truth, but the truth is often a rare commodity in politics.

“What we are witnessing,” said Camp, “is a textbook definition of incompetence.”

All negotiation, says Camp, is based on emotion. When both sides share a vision of the end result of the negotiation it can move forward. When emotions blind one or both sides, it is doomed.

As a recent Los Angeles Times editorial noted, in order to slash federal borrowing by at least $1.2 trillion over the coming decade, “members will have to bridge a deep partisan divide over taxes, spending programs, and the effect of government spending on the economy.”

That is the mission, the purpose of the Super Committee, and the editorial warned that “If they have any doubts about the need to cut a deal, however, they should turn their attention to what’s happening on the other side of the Atlantic.”

The turmoil in Europe, based on decades of excessive borrowing and spending by several nation-states, is a reflection of how critical it is for the Super Committee to achieve its mission.

Automatic cuts, not guided by the need, for example, of maintaining our military strength could have disastrous consequences if the U.S. was perceived as weakened and vulnerable by its enemies. Diminishing our military capabilities at this time is not an option.

The Super Committee is an admission of the failure of the U.S. Congress to fulfill its responsibility to conduct the nation’s borrowing and spending in a prudent fashion and it’s been a failure in which both Parties have participated for a very long time.

The deadline for the Super Committee to reach agreement is November 23, the day before Thanksgiving and one side has walked away from the table.

I wish the Super Committee could bring Jim Camp in to help resolve the impasse. Simply stated, failure is not an option.

Editor’s note: Jim Camp is the founder of the Camp Negotiation Institute and the author of “Start with No” and “No, the Only Negotiating System You Need for Work and Home” which has been translated into twelve languages.

© Alan Caruba, 2011

Monday, August 8, 2011

President Blah, Blah, Blah


By Alan Caruba

President Blah, Blah, Blah got in front of the television cameras midday on Monday to say the usual meaningless things he has been saying since he was elected, none of which are true and none of which have been able to hide the fact that he has driven the nation into the ditch with a lot of help from Nancy Pelosi and Harry Reid.

Over the weekend he unleashed the White House attack dogs to blame the nation’s problems on the Tea Party when, of course, it was his administration that added three trillion to our debt.

After a while we just stop listening to what a president says; especially if we have concluded he is either clueless or has a hidden agenda.

“If his lips are moving, he’s lying” is an old cliché, but it fits President Barack Hussein Obama because it is quite likely that no one believes him any more with the exception of the usual brain-dead liberals who still think he is a genius. So far he has shown a genius for increasing the debt and the unemployment numbers.

This is a man who was still talking about electric cars, high speed trains, and renewable energy while the price of gas continued to increase along with everything else.

On Monday he was still talking about the nation's infrastructure as a source of jobs even after recently admitting there were few "shovel ready" projects. Tired ideas, ideas that don't work, repeated over and over again.

President Obama has been boring people from the day he took office. “This was the moment when the rise of the oceans began to slow and our planet began to heal.” The oceans have been rising a few centimeters every century and the planet is just fine. His election did not transform either the laws of nature or physics.

Instead, all that transformational gibberish turned out to be about a nation already in financial trouble as the result of the September 2008 bursting of the housing bubble. His response was to waste a great deal of time forcing Obamacare on everyone. Americans want to feel that they have a say in what the government is doing and, when they don’t, they organize.

The emergence of the Tea Party was the legacy of Obamacare. A movement without leaders, but one that made itself felt in the 2010 elections that transferred the power of the nation’s purse from Democrats to Republicans in the House and reduced their majority in the Senate.

It may just be my imagination, but President Obama seems to believe he can just stand at the podium, read from the Tele-Prompters, and convince Americans that all our problems have to do with “millionaires and billionaires”, “corporate jets”, and the folks who provide the sources of all real energy; coal, oil, and natural gas.

Nobody is buying those idiotic electric cars (except government agencies) and nobody believes the Green grifters who have been living off federal largesse with their pathetic wind and solar farms, and ghastly ethanol. If it were not for government mandates they would all have been out of business long ago.

Politico recently reported that “people and households earning more than $1 million annually made up just 0.1 percent, or just over 235,000, of the 140 million tax returns filed in 2009.” Meanwhile, there are now a record 45.8 million Americans using food stamps, nearly 15% percent of the population. You do the math.

As for those awful oil companies, the top three paid $42.8 billion in income taxes in 2010. Moreover, according to the American Petroleum Institute, oil and natural gas companies employ 9.2 million Americans and account for 7.5 percent of GDP.

If the Obama administration had not set out to thwart any new oil exploration and a US-Canada oil pipeline, and to shut down active coal mines while punishing coal-burning utilities, the economy would be looking a lot better.

In a recent column, former Reagan speechwriter, Peggy Noonan, said, “But the president is supposed to be great at speeches. Why isn’t it working? One answer is that it never ‘worked.’ The power of the president’s oratory was always exaggerated.”

“The debt-ceiling crisis revealed Mr. Obama’s speeches as rhetorical kryptonite. It is the substance that repels the listener.”

In an effort to look as if he was truly engaged in finding room for compromise during the debt ceiling debate, Obama seemed to be on television with either a prepared or impromptu speech every other day. He does not do “impromptu” well. The casual “eat your peas” remark was received as it should have been, as someone pretending to be the only adult in the room, lecturing the rest of us as children.

I am beginning to sense that even in Congress, a lot of Democrat Senators and Representatives are beginning to do the calculus of getting reelected if they continue to vote the straight party line or are even seen on the same stage as Obama.

None of Congress’s solutions to our economic doldrums are working because of the sharp partisan divide that ignores the problems millions of Americans are encountering. They were all tried in the 1930s and they all failed.

Now that Obama has hit the campaign trail, it would be nice if the mainstream media began to report on how many or how few people turn out to listen to President Blah, Blah, Blah. How many of them are union members? How many are minorities?

How many will have been out of work for so long that by November 2012 they will vote for Bugs Bunny if he is on the Republican ticket?

© Alan Caruba, 2011