Ben Ringel

Econ 400M

Budget Gridlock in Congress

Can’t agree on the some of the simplest, non-partisan legislation:Highway and transportation fundingStabilizing the interest rates on federal student

loansProtecting women from domestic violence

94% of registered voters believe Congressional gridlock is both hurting the U.S. economy, and lowering our standing in the world

Congressional Gridlock is a Problem

“For the second year in a row but only the third time in the 30 years that National Journal has published these ratings, no Senate Democrat compiled a voting record to the right of any Senate Republican, and no Republican came down on the left of any Senate Democrat. (The first time this happened was 1999)” (Fox, 2012).

Most Hyper-Partisan Congress Ever?

In an election season, especially, neither side wants to appear ‘weak’

Republican position: government spending and taxes on the wealthy are hurting production and raising the deficit

Democratic position: generally support government spending and raising taxes on the wealthy

Economists and budget experts agree that a mixed approach to spending and taxes is best for the long run

Budget Disagreement

PlayersDemocratsRepublicans

StrategiesStick to the party lines regarding typical

budget policiesCompromise on the budget and make some

concessions to the other party

The Game

The Table and Payoffs

Republicans

Party Lines Compromise

Democrats

Party Lines 0,0* 1,-1

Compromise -1,1 3,3*

Perfect informationRepeated every year

New budgets are legally mandated to be proposed and voted on annually

Choices in real life aren’t as simpleThere are different degrees to which players can

compromiseThe two players (Democrats and Republicans) may be

composed differently in any given yearSome politicians may get voted out of office, in which case

new ones take their placeTiming of the game could have an effect on the outcome

In a year where many seats are up for re-election, players may have even more incentive to play the party lines

Additional Considerations

Represents a coordination game“games which exhibit multiple Nash equilibria

which are Pareto-rankable” (Cooper et al., 1990)There are two pure strategy Nash equilibria

When both players decide to play the party lines, and when both players decide to compromise

The players are clearly better off when they both decide to compromiseEach receive 3 in this situation, compared to

receiving 0 when both play party lines

Coordination/N.E.

Congress has realized they will probably play the party lines N.E.Have not even bothered voting on or proposing

a budgetDon’t want to risk any voting or discussion that

could be toxic to their re-election chances“Congress is legally required to consider a

budget resolution every year, but there’s no penalty for not doing it, and no one has any standing to sue” (Chaddock, 2012).

In Real Life

Supreme Court justices are guaranteed their positions for lifeDon’t have to worry about getting re-elected or

re-appointedTakes away disincentives for judges to rule how

they truly feelPerhaps longer terms or some sort of tenure

system could reduce incentives to avoid compromise in Congress?

Supreme Court

Political action group with a 12 point plan to break gridlock, promote constructive discussion, and reduce polarization

Get us to the pareto-optimal N.E.One part of the plan is to dock members of

Congress pay for “each day that they fail to pass the budget and all appropriations bills for the next fiscal year before the prior fiscal year ends” (No Labels, 2012)

“No Labels”

Questions?