Happy New Year 2013

Okay, help me out here, informed readers.

The 112th Congress formally comes to an end on January 3, when the new session's members will be sworn in.

Whatever the Senate has done, if the House hasn't done likewise, won't count once the 112th session expires.

So ... the possibility of the big 'compromise' every one is talking about turns on a 2 day difference between two different deadlines.

We've already gone off the 'cliff.' The Bush tax cuts have expired, we are living in 2013 with the pre-Bush tax rates formally back in force.

So, the Senators, by acting on Dec. 31, before the cliff, were able -- and will always be able -- to describe their action as raising taxes on 'those fat cats' (relative to 2012 law).

But members of the House, by acting on the 1st or 2d of 2013, will be able to describe their actions as a tax cut, relative to the new/resurrected/Clinton-era rates, if they pass the same bill. So of course they haven't violated any pledge they may have signed not to raise taxes, because the tax increase took place automatically, not by their vote, and they will then have voted to lessen it slightly, i.e. to decrease taxes.

Is that it?

If it isn't brilliant, it is insane. I can't decide which.

A victory for the backbenchers

The President seems ticked off chiefly that negotiating with "the leadership" isn't enough, that the backbenchers in each party acted yesterday as if they have minds, and constituents, of their own.

Mr. Bush's address this morning, at 8:45, began as follows: "Yesterday, the House of Representatives voted on a financial rescue plan that had been negotiated by Congressional leaders of both parties and my administration. Unfortunately, the measure was defeated by a narrow margin. I'm disappointed by the outcome, but I assure our citizens and citizens around the world that this is not the end of the legislative process."

It "had been negotiated." It was, you see, a done deal. Then those darned non-leaders got in the way.

Personally, I'm happy for its loss. It represented a lousy deal. The key for any revised plan ought to be a debt-for-equity swap, bringing in the bondholders of the major financial institutions as the holders of equity in the re-organized entities.

This thought is hardly an idiosyncracy of my own. A lot of people are making the debt-for-equity point, but no one within the beltway seems yet to have listened.

Sometimes you can't get things right until you break what is wrong. The backbenchers broke something wrong yesterday. Bully for them.