Thomas Schelling, the recipient of the 2005 Nobel Memorial Prize in Economic Sciences, wrote the book on this topic. Speaking of those who represent workers in a labor-management dispute, Schelling drew attention to the strategic benefits of powerlessness on the part of labor’s representatives.
If the workers are themselves intransigent, their representatives may be able to obtain an excellent deal “because they no longer control the members or because they would lose their own positions if they tried.”
Schelling’s account uncannily presages the current situation in the House of Representatives. Many people believe that House Speaker John Boehner can’t control House Republicans and that if he makes certain compromises with Democrats and the president, he will jeopardize his position as speaker. In an important respect, this perception has greatly increased his authority. When House members tie his hands, they strengthen his hand.
Obama can also benefit from a degree of powerlessness. Some legal scholars contend that under the 14th Amendment, the president has the power to ensure that national debts are paid, even if Congress doesn’t raise the debt limit. If they are right, his bargaining authority is weakened.
The president has been claiming that without legislative action, the nation will inevitably suffer the terrible fiscal consequences of a default. If he can prevent those consequences on his own, that claim is weakened, and his bargaining position is undermined.
Obama has also found it important to say publicly, and on numerous occasions, that he won’t engage in negotiations with Congress until the debt limit is raised. Such statements don’t tie his hands, but they have a similar function, because it would not be so easy for him to backtrack.
In standard negotiation theory, there can be a significant bargaining advantage for the person whose hands are tied. But what if both sides end up lacking the ability to compromise? That’s a big problem.