SENATE DEMOCRATS have somehow agreed to a procedure likely to result in passage next week of a bankruptcy, minimum wage and tax cut combination, all three major elements of which are defective. It's a bad way to start an important year.

The underlying bankruptcy "reform" bill is tilted too far in favor of creditors; the minimum wage increase that Republicans attached to it last year is attenuated; and the price of the limited wage increase is an exorbitant package of tax cuts ostensibly meant to compensate small business owners for the increased cost. Most of the tax savings would go to high-income individuals who have nothing to do with small business. The cost of the bill is masked by the staging of effective dates. The estimated revenue loss would be $18 billion in the first five years, nearly $60 billion in the next five and $16 billion in the 10th year alone. A particularly costly health insurance provision would do next to nothing to help the uninsured buy coverage. It would instead mainly help pay the premiums of relatively well-off people who already have insurance.

An argument can be had about exactly how much the minimum wage should go up. The president has proposed a $1 increase over two years, partly in the name of restoring lost purchasing power. The Republicans want to spread the $1 over three years, and that's what's in the bill. The tax cuts would constitute legislative extortion in either case. A modest tax cut for small employers might be justified, but not this.

The lending industry badly wants the bankruptcy bill. That's the pressure to which the Senate Democrats are yielding. They say not to worry, that the bill may be amended in conference and if not the president has promised to veto it. The White House, while not retreating from the veto threat, also says not to worry; either the Senate will clean up the bill or the lending industry will persuade the Republicans to remove the offending provisions. Meanwhile, however, the bill next week likely moves a step closer to enactment.