With the help of Jon Elster and Cristina Bicchieri, I think I have a handle on it. Obama is a conscientious bargainer, but a slow learner. To see this more clearly, let's use something I can't use very well: game theory.
Classic two player games are designed to show what rational actors would do given specific known payoff formulations. For example, consider this:
This is a simple two player game. In this game, there is common knowledge that both players are rational. The rules are straightforward. One player moves at a time. Player I can either move down, terminate the game, and walk away with a 1, leaving player II with nothing. Or, he can chose to extend the game, offering player II a chance to either: a) move down, allowing player II to collect 2, leaving player I with nothing; or b) continue the game to the third node, where player I will terminate the game, either walking away with 3, and leaving player II with nothing, or - less plausibly - giving 3 to player II and walking away with nothing himself. Given this scenario, a rational player will take the first payoff available. If player I is rational, he will terminate the game at node 1. If player II gets the chance - because player I waffles or misunderstands the payoffs - he will end the game, walking away with 2.
Barack Obama is not rational, at least not in the simple formulation depicted in this game. He has commendable, but in this political environment naive, faith in bargaining. For Obama, the game looks like this:
Obama has confidence that as political opponents negotiate, the ability to accomplish even greater things - grand bargains - emerges. He's not wrong. A body of theory I often return to - Putnam's work on social capital - informs us that repeated engagement helps build trust and patterns of reciprocity. We get better at working together the more we try. This allows us to risk things that we might not attempt otherwise. We feel less vulnerable, because we have confidence that our opponents/collaborators will not take advantage of a concession. To illustrate what I mean, imagine a school board and a teachers' union making some difficult decisions about how to keep schools open in the face of a budget crisis. The teachers and the administrators have had a history of encounters, bargaining over issues large and small, and across that iterative history of encounters, the two sides have learned that, although they view challenges through different lenses, each side wants to serve the public good, and educate as many kids as possible, as well as possible. With that in mind, the two sides might agree to a bargain that cuts pay for new teachers, preserves pay for more experienced teachers, and creates a process requiring neighborhood school boards to make recommendations about how, and under what criteria, new teachers are given tenure and higher pay. The school board gets the cuts it wants, but surrenders some control over how teachers are assessed and rewarded. The teachers make some concessions regarding entry-level pay, but map out approaches to promotion that allow teachers working in difficult settings - violent, low income neighborhoods filled with struggling families, for example - to be evaluated by context-relevant criteria. It's a socially preferred outcome - schools stay open, teachers stay on the job - that might not be possible if the two sides were negotiating without trust and expectations of reciprocity.
Obama's problem is that he is negotiating with opponents who have no interest in serving the public good. He has been too slow to learn this, perhaps because his faith in the value of iterative negotiations is too strong. He believes in engagement, and the power of long-term rationality. If Republicans and Democrats continue to work together, he believes each party can get some of the things they want and the country will be better off. But he's misjudged his opponents, while they have quickly learned to take advantage of his vulnerabilities. What we get is something like this:
Republicans, knowing they can, because Obama is loathe to defect, continue the game across several iterations, then terminate, winning twice as many concessions as they could have had they defected earlier. Obama is left to hope he gets some political gain because he is the only participant in the game with the nation's interests in mind, or because he is the only adult in the room. But, in the meantime, his poll numbers drop, his followers are dispirited, and we haven't really done anything to help the unemployed, or regulate banks, or solve our most stubborn, long-term problems. I have many friends who believe faith is a wonderful thing. In this case, it's a handicap.
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