The stock market decidedly did not like last night's failure by House Republicans to pass House Speaker John Boehner's "Plan B" fiscal cliff proposal. But I'm against the markets and with Jonathan Chait: This failure, embarrassing though it was, actually makes a fiscal cliff deal before January more likely.
Remember, Plan B was never going to become law. The point of it was to give Republicans political cover in the event of a cliff dive. If we got to January without a deal, they would have been able to insist that they had passed a reasonable plan that Democrats could rescue the U.S. by adopting.
But since Plan B can't pass the House, what can Republicans say if we go over the cliff? The answer is "nothing." Losing Plan B's cover makes it politically urgent for Republicans to cut a deal with Democrats. The desperation that drove Boehner to try to pass Plan B will now drive him to be more flexible with President Barack Obama.
Don't assume last night's vote means Boehner can't get a compromise through the House: Unlike Plan B, a final compromise deal will have strong Democratic support and won't need anywhere near 218 Republican votes. And because Boehner and Obama are already pretty close together on substance, the final compromise won't be that much more painful for Republicans than Boehner's last offer.
That deal will be struck as soon as Boehner and a critical mass of House Republicans decide it is less painful to annoy conservatives than to prolong this manufactured crisis while bearing all the blame. The only question is whether that point will come before Jan. 1 or after.
Read more breaking commentary from Bloomberg View at the Ticker.