Why is Washington at loggerheads over "cliff"?

Commentary:

(MoneyWatch) Even with signs of a breakthrough on the "fiscal cliff" talks, the political standoff has already damaged the U.S. economy, with economists lowering their growth estimates for the final months of the year. More broadly, the impasse also has Americans wondering why lawmakers can't seem to clinch a deal that both Democrats and Republicans agree is critical for sustaining a delicate recovery.

Of course, both sides also blame each other for being inflexible and for blocking compromise. But a little negotiation theory helps explain the current mess, along with the general state of dysfunction in Washington.

• Government Shutdown: Negotiation Gone Wrong... or Right?
• "Fiscal cliff": A lesson in how not to negotiate

Any successful negotiation contains a few basic elements:

• Discussion between the involved parties
• Items that each side wants to obtain
• Prioritization by each side as to what is most important
• Some principle or goal so important that both sides are willing to compromise

Take negotiations between a large company and a labor union over employee wages. The two sides come together. Both workers and management have their goals for the negotiation. Ultimately, both need the company to continue in business if management and rank-and-file workers are to retain their jobs and even begin to approach their original goals. That is the key to compromise: Both sides decide that half a loaf is better than none. Should a strike happen, no work occurs, which means everyone loses what they had hoped to gain.

It's logical to assume that this dynamic might prevail in Washington. Both sides say that they want to avoid increases in everyone's taxes and deep, across-the-board spending cuts that experts agree would damage the economy. That may be true. But the question is whether the two sides talking are really the two sides in the negotiations.

For example, Republican leaders like House Speaker John Boehner are understandably concerned about remaining in office and preserving their influence. If not hard-line enough on fundamental issues like tax rates, they might be vulnerable to primary challenges from candidates who hold more absolute positions. In such instances, they are negotiating with parts of their own party.

In the same vein, Democrats face criticism from the left for having been too willing to give concessions in the past. Disappoint certain parts of the political base and the support necessary to win in whatever election comes next may suddenly vanish.

Each side is trying to appease internal factions that have their own ideological tests and criteria for public policy. Meanwhile, those benchmarks clash.

Until congressional Democrats and Republicans can agree that there are consequences that outweigh what individual office holders or movers and shakers might want personally, then the two sides aren't really talking to each other. Rather, they're negotiating with their own parties. There can't be a dance when the two keep moving past each other with an eye on someone else in the room.