Column: 'Fiscal cliff' just a hill we can jump off

• Use your bully pulpit to promote this as a fiscal "hill" with a gradual impact on the economy.
• You automatically achieve one of your major goals on January 1.
• Make a public effort to work with the Republicans on a grand bargain.

Dear Mr. President:

Let me be frank -- you are losing leverage each day you negotiate with the Republicans on the budget without publicly reframing the fiscal cliff as a flexible deadline that can pass without serious ramifications.

But if you do this and wait to consummate a deal until 2013, your leverage will strengthen and you will have a much greater ability to accomplish your goals throughout your entire second term.

What should you do? Here are my suggestions, from someone who has been studying and training professionals in negotiation fulltime for almost 20 years.

• Control the agenda

The campaign has been over for a week and you appear to be already losing control over the negotiating agenda. How? By seemingly accepting the narrative that the fiscal cliff is a hard deadline that on January 1 will throw our economy into a tailspin.

As you know, this is not true. The Bush tax cuts will expire and sequestration will go into effect only starting on January 1. Employers will not suddenly fire workers if there is no budget deal by then.

Of course, consumer confidence may take a hit and the market may react negatively if you don't get a deal in 2012 or kick the can down the road by extending the deadline. Critically, though, you can impact both.

How? Use your bully pulpit to promote this as a fiscal "hill" with a gradual impact on the economy, not a "cliff" with a precipitous economic drop on January 1. This will ameliorate any negative impact on January 1 and give you and the new Congress time to work out your "grand bargain."

• Strike when your leverage peaks

Negotiating leverage is fundamentally based on what will happen if you can't reach agreement with the other side. The better your alternative to a deal (your Plan B), the stronger your leverage. And the worse your Plan B, the weaker your leverage.

January 1 thus takes on added significance as your Plan B changes on that date. Prior to January 1, your Plan B includes the Bush tax cuts for the highest earners. But on January 1, those Bush tax cuts are history.

Bottom line: you automatically achieve one of your major goals on January 1. And you get this without having to give up anything in return. This is Speaker John Boehner's worst nightmare and a major reason he wants a deal prior to January 1 or to extend that deadline well into 2013.

Keep in mind, though, you will need a deal shortly into 2013 as your leverage then starts weakening as sequestration, etc., starts to negatively impact the economy.

• 2013 negotiations based on shared interests

There's another strong motivation to wait until 2013 to strike a deal -- the negotiations then will be based more on shared mutual interests than on adverse conflicting interests.

For example, almost everyone in 2013 will have a shared interest in tax cuts for the middle class, reversing sequestration's most harmful defense and safety net spending cuts and putting Medicare and Social Security on paths to financial security.

And the biggest conflicting interest –- the tax burden on the highest earners –- will be off the table.

Some, of course, will disagree, suggesting you will poison a 2013 deal by being too aggressive and taking the country off the "cliff." While I know you prefer to bring folks together rather than fight, sometimes you must lead from strength. And consider this, would Speaker Boehner and his caucus take you off the cliff if the shoe was on the other foot?

Historically, also recall that President Reagan's early fight with the air traffic controllers set the tone for his entire presidency. This negotiation has that same potential for your second term.

Of course, there are still some very tough negotiations ahead. But there will be more Democratic votes in the House and Senate with the new Congress. And you may need every vote you can get.

One final piece of negotiation advice. At the same time you reframe the fiscal cliff as a hill and strengthen your leverage, make a public effort to work with the Republicans on a grand bargain. There's no downside to talking and they may surprise you. But don't make any significant concessions in return for more revenue from the top earners.

This would be akin to giving up something for nothing. I wouldn't recommend this.

Marty Latz is author of Gain the Edge! Negotiating To Get What You Want, taught negotiation at Arizona State University's Sandra Day O'Connor College of Law and was at Harvard Law School with President Obama.

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