Republicans and Democrats are negotiating a budget deal in an effort to avert a government shutdown. The last time the government was forced to furlough workers, Congressional Republicans and their leader Newt Gingrich took much of the blame in the eyes of the public.  It is generally believed that Republicans, the anti-goverment party, would again be blamed for a government shutdown should an agreement not be reached this time around.

The first-order analysis bears this out.  While a government shutdown would be a bad outcome for all parties, it is relatively less bad for the anti-big-government Republicans.  Other things equal you would infer that if a shutdown were not averted it would have been because the Republicans were willing to let that happen.

Of course other things are not equal.   The second-order analysis is that Democrats, understanding that Republicans would take the blame now become relatively more willing to allow a shutdown.  This affects the bargaining. Democrats are now emboldened to make more aggressive demands for two reasons.  First, the cost of having their demands rejected is lower because they score political points in the event of a shutdown. Second, for that same reason Republicans are now more likely to accept an aggressive offer.

Will the blame equilibrate?  Does the public internalize the second-order analysis and adjust its blame attribution accordingly?  And what does equilibrium blame look like?  Must it be applied equally to both parties?

In politics only the most transparent arguments hold sway with the public.  The second-order analysis is too subtle to be used as a talking point even though probably everybody understands it perfectly well.  A talking point is effective as long as it’s believed that many people believe it, even if in fact most people see right through it. So the first-order analysis will rule and the blame will not equilibrate.

In the current environment that could raise the chances of a government shutdown.  Ideally Democrats would maximize their advantage by increasing their demands and stopping just short of the point where Republicans would rather trigger a shutdown.  But the Tea Party complicates things. They might be so steadfast in their principles that they are not deterred by the blame. That could mean that the best deal Democrats can expect to reach agreement on is dominated by making a demand that the Tea Party rejects and forcing a shutdown.