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An Evolutionary Explanation For The Fiscal Cliff

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RACHEL MARTIN, HOST:

And when President Obama returns home to Washington, he'll have his work cut out for him. Congress and the White House are currently in negotiations on how to avoid the so-called fiscal cliff. And they have a self-imposed deadline: New Year's Day, 2013. If they don't make a deal before then it will mean higher tax bills for most Americans and big spending cuts for government programs, including the Pentagon.

PRESIDENT BARACK OBAMA: Both parties voted to set this deadline. And I believe both parties can work together to make these decisions in a balanced and responsible way.

MARTIN: That was President Obama in his weekly address from the White House. And he spoke to the main sticking point in negotiations so far: keeping the same tax rates for middle and lower income Americans and raising tax rates for the wealthy.

OBAMA: We shouldn't hold the middle class hostage while Congress debates tax cuts for the wealthy. Let's begin our work by actually doing what we all agree on. Let's keep taxes low for the middle class, and let's get it done soon.

MARTIN: House Speaker John Boehner said this past week that Republicans are willing to compromise with the president on taxes - sort of.

REPRESENTATIVE JOHN BOEHNER: To show our seriousness, we've put revenue on the table, as long as it's accompanied by significant spending cuts.

MARTIN: Lawmakers still disagree over how to reduce the deficit; where exactly to cut spending, and how to raise taxes - whether by raising rates or ending tax breaks. And Congress hasn't always been good at meeting deadlines. Remember that the reason we have this fiscal cliff is because of the last-minute deal to raise the debt ceiling last year. But there's a little more agreement about the need to reach a deal now.

REPRESENTATIVE PETER ROSKAM: Going over the fiscal cliff, in my view, is a bucket of crazy.

MARTIN: That's Peter Roskam, a Republican congressman from Illinois. He's also the deputy majority whip, which means he's in charge of rounding up Republican votes in the House of Representatives. Roskam spoke recently at the Peter G. Peterson Foundation here in Washington. And he said that the fiscal cliff provides a real incentive for compromise.

ROSKAM: It was not meant to be policy. It was meant to be a provocation for action and it is a successful provocation for action. Right? Everybody is talking about it. My sense is that we will figure this out and we will get this done.

MARTIN: Well, we wanted to know more about the psychology of these negotiations. So we asked NPR science correspondent Shankar Vedantam to come by the studio. Hi, Shankar. Thanks for being with us.

SHANKAR VEDANTAM, BYLINE: Oh, glad to be here, Rachel.

MARTIN: OK. So, let's set aside all the partisanship and political grandstanding of the moment. Is there a scientific behavioral reason why lawmakers still cannot agree on how to avoid the fiscal cliff and get the debt under control?

VEDANTAM: Yes. I mean economists have known for a very long time that human beings are fundamentally short-term thinkers. And this manifests itself in all kinds of different ways. And the fundamental problem with the debt is that we've enjoyed the goodies upfront and we had to pay the cost down the road. That's why you have a debt. And the reason this happens is that our brains are really wired in many ways to be short-term focused.

In our ancestral environments that crafted our brains through evolution, we were focused on stuff that happened in the coming hours and seconds and minutes, not the coming months and years and decades. And really what's happening here at a scientific level is that we are finally confronting the challenge of all the goodies that we've enjoyed and the money we've spent. The chickens have come home to roost now and we're being forced to confront the fact that we're in a long-term unsustainable path.

MARTIN: So what does that mean that we have this deadline? There is this sense of urgency in this decision-making. If Congress fails to act, the country faces these dramatic spending cuts and tax hikes. How does this sense of urgency play into our behaviors?

VEDANTAM: Well, since we are so focused on the short term, what we've often done is we've said, how do we set up mechanisms that force us to do what's good for us in the long term. So I mean, as parents, we do this all the time with children, right? We set up rules. We say, you can get your desert but only if you finish your veggies first. You can player video game so long as you finish your homework first. And what Congress has done really is a variation of this for adults.

They've basically said, we're going to force ourselves to do the responsible and right thing by setting up a cliff. And the cliff is so bad, and its consequences are going to be so detrimental, that it's going to force us to our house in order. So essentially, what the cliff does is it makes the long-term challenge salient in the short-term. It puts a looming catastrophe right in front of us and says, this is going to get everyone's attention to sit down and focus.

MARTIN: So what happens when people are put in these tough situations? When they have this looming crisis and this deadline, do people usually make good choices?

VEDANTAM: Well, rational people make good choices when they're confronted by tough situations. You know, if you have a cliff, the rational thing to do is to step back from the cliff and not go over the cliff. And you can argue that if the fiscal cliff works as designed, that's what's going to happen. Congress is going to step back from the cliff and work out a reasonable solution. The problem is people are not always rational.

(LAUGHTER)

VEDANTAM: And what's happening in Congress is that Republicans and Democrats distrust each other so deeply, and each side believes that it has the moral high ground, that increasingly what's happening is both sides are talking now about going over the cliff. Because rather than let the other side win, they're saying it's better that we both go over the cliff than let, you know, this other side do this immoral thing.

MARTIN: So it's an ultimatum isn't effective in this kind of situation, if the idea of this cliff isn't an effective mechanism for communication or for compromise, what is the solution?

VEDANTAM: The imposition of the cliff is not going to increase trust. If a couple comes in to talk to a psychotherapist and they deeply distrust one another, the solution is not just to say, bad things are going to happen to you if you don't step back from the brink. What you want to try and do is to build a trust between these two parties. So if you're a psychotherapist, which might say is, focus on the stuff that you have a comment; focus on the agreements that you have. It may actually be that you are agreed on 90 percent of the issues that confront you; that the things that divide you are actually a fairly small portion of what you have in front of you.

I'm actually thinking of working on a story about ways you can apply psychotherapeutic principles to public policy. And one of the things that people talk about here is this issue: how do you build trust when there is grave mistrust?

MARTIN: Hmm, trust in short supply in Washington on Capitol Hill right now.

NPR's Shankar Vedantam. Shankar, thanks so much.

VEDANTAM: Thanks, Rachel.

(SOUNDBITE OF MUSIC)

MARTIN: You're listening to NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

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