Mutually Assured Destruction did not succeed in bringing the Democrats and the Republicans back to bargaining table to renegotiate the sequester. So, a reporter facetiously suggests locking up everyone in a room till an agreement is reached.

This is not so facetious as it seems – the sequester was meant to create agreement because the spending cuts were a hostage that no-one wanted to lose. Schelling thought about this sort of thing but the obvious reference is Oliver Williamson’s “Using Hostages to Support Exchange”. So, let’s go the whole way and think about who we would have to hold hostage to give good incentives for Congress to renegotiate the sequester. We would have to have one Democrat and one Republican to give both sides a hostage to release.

First off, John Boehner is not a good candidate for the Republican hostage. The real sequester leaves the Republicans divided – the defense hawks hate it but the deficit hawks want it. Similarly, a significant fraction of the Republican House caucus would just love to leave Boehner hostage. They are not going to negotiate a grand bargain to get him out. Extrapolating this logic to the Democrats, it is pretty clear Hillary Clinton would be a great hostage – all the Democrats would want to release her. This intuition further suggests Hillary will be great candidate in 2016, should she want to run. She would unify Democrats behind her and is a centrist so she would be a good candidate in the general election. My intuition is that Biden does not generate the same enthusiasm for hostage release.

So who is a good Republican hostage? Reagan, if he were still around, would be great. Who is today’s Reagan? Let’s face it, Jeb Bush does not inspire – Republicans would leave him hostage to get a good deal to free Hillary. Ditto Chris Christie. Rubio? Ryan? If Rubio were left hostage, the Republican Party would not lose a “thought leader” as we say in b school. They could pretty much survive without him intellectually. McCain is a leader on immigration reform, Rubio’s key issue. Sure, they lose diversity but not leadership. Ryan on the other hand is a leader when it comes to fiscal matters. No-one is the House can take his place and the Senate budget experts may have expert opinions but lack charisma (e.g. Portman).

So, Ryan should be the Republican hostage and he should be locked up with Hillary Clinton until a “grand bargain” is reached.

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