Related to: Politics is the Mind-Killer

Both sides seem to have a stake in the current budget supercommittee failing. Why?

The NYTimes reports:

Intrade, the political futures market, currently puts the odds at just under three to one in favor of both a Republican takeover of the Senate and retention of the House — 74.4 to 21.5 for the Senate, 72.2 to 28 for the House.

According to an ABC poll, a majority of Americans, by a margin of 55 to 37, believe that the Republican nominee will be victorious. Republican voters are overwhelmingly optimistic about their chances for the White House, 83-13. Democrats, by the far smaller margin of 58-33 percent, think President Obama will win re-election. Independents, by a 54-36 margin, believe that the Republicans will take the presidency.

The chance of all three contests going the Republicans’ way is less than 50-50, but if they do, the payoff would be huge.*

As a top Republican Congressional aide put it in a interview about the supercommittee’s deliberations, “Winning the trifecta — House, Senate and White House — in 2012 is a game changer. We would be in the driver’s seat.”

In this scenario, Republicans in the 113th Congress would swiftly enact a version of the budget proposal put forward by Paul Ryan....

Capitalizing on collapse is not the exclusive terrain of the right. There are some on the left who believe that simply taking no action whatsoever before this year’s November 23 and December 23 deadlines will force the expiration of the Bush tax cuts at the end of 2012. The expiration of these cuts will produce an estimated $3.8 trillion in new revenue between 2013 and 2022 – enough to maintain many of the key safety net programs with relatively minor tinkering.

Of course, this strategy depends either on a Democratic chief executive to veto Republican legislation extending the Bush cuts or on the less likely event of Democratic retention of the Senate or a takeover of the House.

In other words, the Republicans believe they can achieve complete victory so that they can enact their whole agenda, while Democrats believe they can block this victory.

On a key component — Obama's re-election — Republicans believe they will defeat Obama with 1:6 odds, while Democrats believe this event has only 3:2 odds.**

With a 9-fold difference in this key perception, it seems highly unlikely the two will reach a compromise.

* Not necessarily true — you can't just multiply 74%*72%*83% as these events have high positive correlations.

** Yes, perhaps the people in power have different perceptions than the rank-and-file electorate — but they still must win their base's support to gain re-election.