There we go again – the vote to raise the debt ceiling is right after the midterm elections. The two parties butted heads on the same issue during the Obama administration. What did they learn?

In October 2013, the U.S. House of Representatives and the Senate ended the government shutdown, extended federal borrowing, and avoided a U.S. financial default. The historical deadlock came to an end. It was the defeat of ultra-conservatives (the Tea Party) in their opposition to Obama’s Affordable Care Act.

The Tea Party had demanded that Obama make concessions on the Affordable Care Act and budget cuts. They asserted that they would not vote to raise the U.S. debt limit and, therefore, not fund the government until the Obama administration agreed to the concessions.

President Obama held his ground and refused. The confrontation grabbed public attention. The public saw the Tea Party Republicans trying to derail the government and prevent public access to affordable health care. The Republican Party’s approval ratings sank to record lows.

In negotiation, the threat of sanctions can be valuable if it is practical and the BATNA (Best Alternative to Negotiated Agreement) for the other side is weak or damaging. The Republicans’ threat was not well thought out. They also gave Obama no strong incentive to negotiate. They needed to assess his BATNA accurately. Obama calculated that Republicans would be blamed for the government defaulting on its debt.

The conservative Republicans’ last-minute decision to give in was fiscally prudent. It also confirmed that their threat had been an empty one. It also set a dangerous precedent — the Obama administration could ignore similar threats.

Think it through and understand your and the other sides’ BATNA well.

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