By Dr. Ken Broda-Bahm:
As the year winds to an end, all the attention is on the "fiscal cliff" and whether there will be a last-minute save or whether, when we "Ring in the New" on January 1st, we will be ringing in large tax increases and drastic cuts to Federal programs. As of Monday morning and this post's press time, there is a vote to be scheduled on the administration's plan, but still significant distance between house Republicans and the President. Adding to the frustration is the fact that Congress itself loaded the gun and set the trigger, creating this cliff as a consequence of the contentious debt ceiling debates in Summer of 2011. That makes the current countdown a "politically manufactured crisis" in a real sense. Regardless of whether it comes to pass tomorrow, the levels of delay and dysfunction shown by our politicians in creating and addressing the cliff has tried the nation's patience, tanked congressional approval ratings, and jeopardized the confidence in the U.S. and world economies.
A different way of viewing the current predicament is to see it as a settlement deadline gone awry. Much like the deadlines and sunsets that litigators use when trying to resolve a legal dispute, the idea is to create urgency by manipulating the circumstances. But in some cases, like the fiscal cliff negotiations, the manipulation is artificial and the negative consequences are entirely avoidable. The point? Cliffs have consequences, and manufactured duress may not be all it's cracked up to be. In this last-of-the-year post, I'll take a look at some research and experience on deadlines, as well as the general question of whether deadlines tend to help or hinder settlement.