Here's where we are now with parity:
Last week, the House passed the parity bill as a stand-alone, and it paid for the expected cost of parity through a corporate tax provision (according to self-imposed House rules, it must pay for any new spending). The same day (Sept. 23), the Senate passed the same parity language, but as part of a much larger package of bills that included parity, disaster relief funding, a lot of popular tax cuts, and many other provisions (called a "tax extenders" bill, a bit of a misnomer since it's mostly tax cut extensions). This package was not fully paid for, and so the House didn't want to vote on it. The Senate wanted the House to vote on the full package, so it didn't want to vote on the stand-alone parity bill (because to do so would weaken the pressure on the House to take up the full Senate package). The two chambers were at a stand-off.
On Monday, the House of Representatives failed to pass the $700 financial rescue/bailout package that's dominated news coverage over the past week. This was a shock to most observers, and threw the entire financial rescue plan awry. No one was quite sure what was going to happen next--should the House revote? Change the bailout deal? Wait and do nothing? To make matters more complicated, dozens of House and Senate members were leaving town for the Jewish New Year. And Congress could adjourn at any time--they were originally supposed to leave town last week. If they didn't resolve parity before they left, it didn't look likely that they would come back and the whole legislative process for parity would go back to square one in January.
Now we know the next steps for the financial rescue package. The Senate is going to vote on a package similar to the one that failed in the House (with a few modifications, most notably that it raises the FDIC insurance level to $250,000). But wait--according to the Constitution, only the House can initiate new spending bills. To get around this "technicality," the Senate has to attach the $700 billion financial rescue bill to a pre-existing spending bill that's already passed the House.
They chose HR 1424, the original House parity bill (!!!!!!!???!!!!???--this is a blog, after all, so please indulge the exclamation marks). Back when it was introduced in March 2007, it's safe to say that no one in their wildest imaginations thought that HR 1424 would one day be the vehicle for a $700 billion emergency financial bailout.
So the Senate will vote tonight (and pass) HR 1424 as amended, which will strip the old parity language, insert the new compromise language that's already passed both chambers, include the "tax extenders" package that the Senate passed last week, and include the only-slightly-modified $700 billion financial rescue package.
The Senate having passed the new HR 1424, it will then be sent to the House. What happens next will depend largely on the reason why the original bailout failed.
Did it fail because of its cost? If so, it's hard to see how those House members who were concerned about the cost of the bailout will be encouraged by this new development--it includes additional spending, the exact same spending measures that the House refused to even bring up for a vote before unless they were paid for. They're still not paid for, and the cost of the bailout (which will be paid almost entirely by borrowing) makes any additional spending seem even less acceptable.