Published for www.keithhennessey.com, December 12, 2012

President Obama’s behavior over the past month is consistent with three different models, and I cannot figure out which one applies.

In model 1 the President is a risk-taker. He is a competent and effective negotiator who is willing to risk a recession and the ensuing political blame game in January because he thinks both will help him achieve his fiscal policy goals. I don’t think the President is willing to take such a risk, but Michael Barone makes a convincing case otherwise. You decide.

In model 1 the President has leverage because he is willing to go where Congressional Republicans are not (over the cliff).

In model 1 the President would, in the last few days of December, compare Speaker Boehner’s last offer with what the President thinks he can get after a few weeks of January blame game, then decide whether or not to accept the offer or take us over the cliff.

In model 2 the President is bluffing quite effectively. He is risk averse, and he is also a savvy, patient, and skilled negotiator. Privately he knows that he cannot allow a no-bill scenario because a recession would seriously damage his second term. But he has bluffed Congressional Republicans into thinking he is willing to take that risk, and this bluff has given him tremendous leverage. His initial offer was outrageous but designed for maximum press benefit over the next few weeks. He will demonstrate to a willingly gullible press corps that he is reasonable by showing the significant negotiating concessions he has made (from an absurd starting point) in an attempt to get a deal with those extreeeeme Republicans.

Full post here

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