The bailout failed. How do we pick up the pieces? Or do we?

The more effective strategy may be for Pelosi, Dodd, and Frank to cater even more to Democrats and force Bush and Paulson to go along with it. (Again, that sentence nearly appears false by definition.) If House Republicans are not going to go along with a compromised bailout bill, then why not compromise the compromise? Democrats have majorities in both the House and the Senate, so it may be time to unleash liberal amendments for the bill to secure a unanimous passage among Democrats.

We’re talking meaningful limits on golden parachutes, an ability to renegotiate mortgage terms in court, and a plan to force business to pay the bailout fund’s losses if it loses taxpayer money. These are super-regulatory ideas that would make Republicans scoff, but they’re the kind of proposals that might bring back some House Democrats.

And if the White House really wants this bailout, which it seems it does, Bush may have to suck it up and sign whatever the Democrats put on his desk. He is concerned about his legacy, after all.

Option 2: Blow it up and reboot

Maybe a fresh start—one free of Paulson and Bush’s three-page skeleton—is what’s needed. Plenty of economists, pundits, and Joe Publics have weighed in with their thoughts for weeks. Some highlights include liquifying some markets and recapitalizing others to allow healthy markets to get reinforcements and others to wither away, boosting the FDIC so it handles the failures while watching natural selection do its thing, or letting Warren Buffett negotiate our bailout for us. Mother Jones has collected a host of others.

All of these plans would take time—something that Congress may not have. The markets roared their displeasure today, and credit markets could reportedly seize up this week, making the effects felt outside the finance industry. Plus, we’re a little more than a month away from an election. Already the bailout was going to take weeks to implement, but starting a whole new process would mean the country wouldn’t see any effects until after the elections. That’s politically treacherous territory for both parties.