Auctions on eBay have a deadline and aggressive bidding occurs just before the auctions ends. This is called “sniping” (see this excellent paper for a discussion along with the study of many other interesting issues). One reason offered for this behavior is that bids might not come in as the auction ends so if your low bid gets in and my high bid does not, you win anyway (I seem to remember a paper by Al Roth along these lines). A similar effect arises in the debt limit negotiations.
Assume for now the deadline is August 2 – if the debt limit is not raised by then all hell breaks loose. If the House has a proposal on the table later today, this gives the Senate the change to reject it and table their own proposal. But if the House gets their proposal in on August 1, there is too little time left for the Senate to respond with their own bill. If they reject the House proposal, all hell breaks loose. And if the President vetoes the bill, all hell breaks loose. So, there is distinct advantage to the House from delaying the vote. Symmetrically, there is similar advantage to the Senate from delaying the vote. But if both delay the vote, there is also a huge risk that neither proposal makes it through either chamber because both Reid and Boehner are having hard time drumming up enough votes. So, as both parties delay the vote, there is a huge chance of hell breaking loose….
What if the August 2 deadline is not hard? Then, I think I need a model to sort things out but my intuition is that there is bigger incentive to accept an early agreement (after August 1)- if you reject it, there is chance your counter proposal does not make it through as all hell breaks loose because the government runs out of money. But if early agreements might be accepted, there is a bigger incentive to move early and get your bid in…..
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July 29, 2011 at 12:01 pm
twicker
Some initial thoughts:
There’s at least one more party at the negotiating table here: namely, the voting public. While they (in reality, we) don’t have the ability to actually put forth, or vote on, proposals, we’re the ones holding the House, Senate, & White House to account. Therefore, the timing also has to take into account the effect on the perceptions of the voters.
Thus, Boehner put his proposal forward first – to gain public pressure and perception advantage. However, that advantage was contingent on him passing his proposal and then essentially “daring” the Senate & White House to refuse it. He failed – so now the Senate can come in at the last moment, while allowing the House GOP leadership to implode (interestingly enough, this really does seem to be a House v. Senate thing; the GOP leadership in the Senate has been willing to compromise all along, though not nearly as much as the White House and Dem leadership has already compromised).
If we had a mechanism for the minority party to force the House to vote on something without the speaker letting it come to the floor, this would all be moot; the WH & Dems of both chambers would just negotiate with the Senate GOP and be done with it (the House Dems could poach enough GOP votes to allow something through). IMHO, the current problem is the internal negotiation going on within the House GOP. So far, they haven’t been able to get their proposal passed (though current reports are that that may be changing).
July 29, 2011 at 3:03 pm
Kevin
I don’t mean to give Boehner undue credit, but it seems like this could be a reason for yesterday’s delays. All the papers talked about how surprised Dems were at the failure of the House bill to pass yesterday…so maybe the drama in the House was concocted as a way to give the final Boehner plan an advantage. Originally Reid wanted to wait-and-see what was in the Boehner plan before moving with his own legislation-which he could presumably craft to give him an advantage. Now Reid can’t do that.
“All warfare is deception,” and the ‘crazier’ the Tea Party appears the easier deception becomes for Boehner.
August 5, 2011 at 7:43 am
Republicans Understand “Sniping” Strategy…. « Cheap Talk
[…] Related to my earlier post, where I suggested there as advantage to each chamber from delaying debt limit proposal as long as possible, Pelosi says: [I]f we had days, instead of backed up to hours, we could have said ‘you don’t have the votes, let’s go back in and how do we move this way in order to cut some of those cuts and have a better bill and get the votes.’ So I think we could’ve done better. I think they were successful at just prolonging it to the last minute so that we didn’t have that option and it was default or no default. […]