Why we should expect a shutdown
I think we should expect a government shutdown. When you read the stances of the different leaders, and believe me I use the term loosely, it seems unlikely there will be any common ground found soon. One case is particular I will bring up is Harry Reid. As I look at the situation he faces I see little reason for him to soften his stance from a game theoretic perspective.
There are several reasons his rational strategy is to keep going as is. First, it is an open question who will bear most of the blame for a shutdown. My suspicion is that both parties will take a hit, but who gets hit worst is not entirely clear. It might be the case that the President receives most of the blame and will insulate some of the Representatives and Senators.
Second, it seems that many, if not most, give the Republicans a chance to take the Senate in 2014. These assessments factor in public opinion, but also look at the contested seats and feel it favors the Republicans. What exactly is the incentive for Senator Reid to delay a year to a time he may not have the role of Senate Majority Leader? If he is going to lose control of the Senate anyway, why not dig in now? Again, this is not an endorsement, it is simply looking at the bargaining positions.
Third, some of this seems out of line with prior public comments from Speaker Boehner. If you question the level of his commitment to this approach then you think he might blink. Playing chicken is as much knowing the other guy as knowing yourself.
Fourth, the shutdown does not stop the healthcare rollout because it falls under mandatory spending not discretionary spending. If the Senate is entrenched in their position that they will not stop the rollout of the President’s health insurance legislation, they still get what they want even with a shutdown. My suspicion is this hardly makes them want to negotiate, at least on that issue.
All this leads me to believe that the the Senate Democrats are unlikely to change their stance, and that rationally they should not. Whether the House leadership endorses this strategy or not there appear to be enough members that they will follow through on this strategy. As a result there is no negotiation of any substance and a shutdown seems inevitable.
As a side not there was an interesting piece in the most recent BusinessWeek discussing Jim DeMint as the real leader of the House, not John Boehner.