NOW HERE'S news: the Democrats have done pretty well by themselves the last few weeks. On the two big issues of the deficit and tax reform, House Democrats have rather neatly tucked it to the president and his staff. True, the Democrats are still held together, and just barely, by Band-Aids. But the heart beats. There may actually still be two parties out there.

On the deficit, the Democrats were caught in a doze in the Senate by the Gramm-Rudman proposal. It calls for a balanced budget in five years. The Republicans were said to have retaken the initiative on the fiscal issue, or at least to have neutralized it when the president endorsed the new plan. The Democrats worked their way back. The battle in Gramm-Rudman was always over balance: how to ensure that if automatic spending cuts did occur, they would fall as heavily on defense as on domestic programs -- on the part of the budget that the president did not want to cut as on the part he did. That way, the theory went, he would for the first time have as great an interest as defenders of domestic programs in seeking a tax increase. Let him cut a wider swath through domestic programs than through defense and he would do it.

The House Democrats dealt with this risky proposition in part by defusing it, in what amounted to a declaration of priorities. They took the moral edge off Gramm-Rudman by insisting on exempting from cuts the main forms of federal aid to the poor (Social Security had already been exempted). Most other domestic programs they agreed to leave on the table. If the president wants to cut college student aid or the highway program instead of raising taxes, let him propose it. That is not a bad debate for Democrats to engage in; nor does the world end if they lose. The president is widely thought to have been bluffing when he embraced Gramm-Rudman. The Democrats called him on it. The burden shifts to him again.

So also on tax reform: the Democrats took the frame of a Republican proposal and made it their own. Their bill would give much smaller tax cuts to the very rich and larger cuts to the middle class and poor than the president proposed, while raising to a meaningful level for the first time the minimum tax for both individuals and corporations. The Ways and Means Committee also set aside an obscure indexation provision that the president advanced, under which business tax burdens, though they would have gone up in the short run, might eventually have come back down.

The Democrats produced an old-fashioned tax reform bill (even though it was they who controlled the tax committees all those years and wrote most of the provisions they now seem so intent on revising). The president is having trouble marshalling members of his own party to support what started out as his idea. The Democrats are still on the defensive in national politics. But that's aggressive defense they're playing.