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Deal postpones the moment of truth

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Horse sense is an attribute not limited to people who can think like a horse. It is that rare capacity to think like the other side and show some respect. Unfortunately, however, in the recent negotiations over the “fiscal cliff,” it has been conspicuous by its absence.

The negotiations did not produce the “grand bargain” that both sides professed to want. They produced, at best, a stop-gap measure that postpones the moment of truth. If both sides had put somewhat more effort into anticipating an outcome the other could accept, they might have been able to avert this outcome.

As it is now, the agreement merely perpetuates the deficit until spending cuts can be negotiated or across-the-board cuts set in. That is no way to make policy or to set public priorities.

Horse sense can be the source of a dynamic two-way partnership between horse and rider. By thinking like a horse, a rider can anticipate the horse’s moves. In this way, he or she can gradually test the horse’s responses to different situations and build trust. The horse, in turn, learns over time to sense what the rider wants and to anticipate his or her wish. The two become of one mind and purpose.

Horse sense is not only a source of partnership, however, but can also provide a powerful advantage against an adversary. It is said that Robert E. Lee with his warhorse “Traveller” possessed an uncanny ability to get inside the head of his adversary. Anticipating his enemy’s next move, he could be there to meet him.

But the true potential of horse sense is transforming a rivalry into a partnership. JFK demonstrated this capacity during the Cuban Missile Crisis. He knew that Nikita Khrushchev, when faced with the choice between backing down and nuclear holocaust, would be looking for a way out. By offering to withdraw U.S. missiles from Turkey in return for the withdrawal of the missiles from Cuba, he gave Khrushchev a “fig leaf.”

In contrast, when faced with competing priorities with the current negotiations in Washington, neither side knew how to respond in a way that would let the other off the hook. Neither side made enough of a good faith effort to assess and respect what the other really wanted and how they could help them get it.

In the end, Republicans chose not to be the ones blamed for raising middle class tax rates. But tax increases have always been linked in their minds to spending cuts. To go along with middle class tax relief without commensurate cuts is, to their way of thinking, to forfeit their leverage to demand deeper spending cuts in return for tax increases that affect only upper class taxpayers.

Why, in this circumstance, the issue of tax reform took such a back seat in the negotiations is a mystery. Republicans had long declared themselves to be amenable to revenue increases through changes in the tax code that would close loopholes. For the Democrats to have made a serious effort to include this in the negotiations could have given the Republicans the cover they needed to accede to large revenue increases, without having to demand deep spending cuts in return.

In terms of the Cuban Missile Crisis, this would have let them off the hook from their current humiliating defeat. Now, when the time comes two months from now to negotiate a way out of across-the-board spending cuts, that defeat will surely come back to haunt the Democrats.

The Democrats’ dilemma is that they cannot give in on spending cuts without appearing to go back on promises they have made to the constituencies that make up their coalition. In particular, they cannot afford to curtail investments in clean energy, education, and infrastructure which the president has clearly indicated he intends to make the signature of his second term.

The Democrats’ saving grace, however, is that spending cuts in some areas of domestic spending can help finance these needed investments in public goods. If the Republicans had been more attuned to the president’s commitment to these long-term goals, they could have perhaps used it as leverage for some of the other spending cuts they favored.

The New Years Day agreement avoids the fiscal cliff, but only at the risk of a train wreck over spending cuts two months from now. A little bit of horse sense in identifying some areas of face-saving on both sides could have gone a long way in reducing this risk.

David Wendt is president of the Jackson Hole Center for Global Affairs.

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