When the U.S. Senate and House of Representatives adjourned prior to the most recent election, they did so without making any decision about extending the tax cuts set to expire on January 1. President Obama campaigned in 2008 on a promise to allow tax cuts to the wealthiest Americans to expire. Now he finds himself at an impasse with a new Republican-led House and the Democrats holding the slimmest of margins in the Senate. The President must do something or risk having increased taxes push the country deeper into recession. Republicans argue that the election shows support for their party and want to extend the tax cuts for all. The lines are drawn. The question now becomes one of how to proceed.

QUESTIONS:

1. Does the current impasse on taxes represent emotional conflict, substantive conflict, or both? Inability to resolve this issue is dysfunctional conflict. Can you provide general and specific reasons why this is true?

2. What is the fundamental cause of this conflict?

3. President Obama is calling on Republicans to compromise. Is this a good approach? Why or why not? What is the optimal approach for dealing with conflict? How could this be achieved on the tax issue?

4. On this particular issue, the substance goals are specific (to this issue) while the relationship goals are general (i.e., extend beyond the current issue). What are the substance goals? What are the relationship goals? It presently appears the negotiation on taxes is distributive. If it continues this way, what criteria of effective negotiation are being violated? Is there any way to turn this into a principled negotiation?

SOURCE: L. Montgomery, “Obama Seeking Compromise on Bush Tax Cuts,” Washington Post (Retrievable online at http://www.washingtonpost.com/wp-dyn/content/article/2010/11/12/AR2010111206030.html)