On Twitter, economist Justin Wolfers links us to this article in the New York Times by a game theoretician, proposing new ways for us to think about and perhaps solve the problem of the constant debt ceiling standoffs and the attendant negative effects that occur as a result of them. The article’s author, David McAdams, is apparently also the author of a forthcoming book on how game theory can be used to transform strategic situations, so this is right in his wheelhouse.
I’m no game theoretician, so I won’t presume to cross rhetorical or intellectual swords with Mr. McAdams on that subject. Indeed, the methods McAdams proposes seem as if they might have a salutary effect upon the current logjam of progress in Washington around the debt ceiling, but for one large problem with them: they’re solutions for the wrong problem. The problem in the current debt ceiling crisis is not that there’s been a breakdown of trust between Democrats and Republicans. That is indeed a stumbling block which complicates things immensely; Democrats feel as if they can’t trust the Republicans (for good reason), and Republicans may well feel as if they can’t trust Democrats to make meaningful concessions on immediate debt/deficit reduction. But solving that isn’t simply a matter of gaming the dilemma out differently, because the lack of trust isn’t the foundational problem. A fundamental disagreement on where things ought to be headed is the foundational problem. McAdams writes:
Imagine that, in the negotiations over this problem, the Republicans were to suggest making the next debt ceiling automatically self-extending if an agreed-upon debt-reduction target were met. Such a self-extension provision would allow both parties to avoid the next debt-ceiling crisis.
This is a workable solution only if you accept as a premise the notion that both parties share the same goal: at least some degree of debt reduction, starting right now. It may well be that there are those in the Democratic party, especially on the corporate, “Third Way” end of it, who would be interested in (or at least not averse to) debt reduction now. I would imagine that most Democrats would be in favor of reducing our medium and long-term outlook on the debt – but only if it does not come at the cost of inhibiting the still-fragile recovery or slashing vitally needed safety net programs.
Five years out from a near-depression from which our economy – most notably employment – has still not recovered fully, debt or deficit reduction in the near term looks to the majority of us on the left like exactly the wrong prescription. That’s why setting up a clever, game theory-derived agreement that would technically work to make sure we achieved a debt reduction target is kind of beside the point. In fact, it is actually counter to the point, if immediate debt reduction is not one of your goals but instead something you think would be actively harmful at this juncture.