(Charles Krupa/AP)

Perhaps Mitt Romney is just not a morning person. In the weekend's first debate -- which, like most debates, was held in the evening -- Romney was his typically untouchable self. He watched, bemused, as Rick Santorum and Ron Paul clawed at each other. He easily parried Newt Gingrich's half-hearted assault. He politely listened while Rick Perry tried to talk. He won.

The weekend's second debate, however, took place early Sunday morning, and it was here that Romney made two potentially costly missteps. The first came when he relayed some advice his father, Gov. George Romney, gave him about running for office. "Mitt," the elder Romney said, "never get involved in politics if you have to win an election to pay a mortgage." So unless you're rich, as Romney is and was, sit it out? Then Romney turned his attention to a postmortem of his race against Sen. Ted Kennedy. "I was happy he had to take a mortgage out on his house to ultimately defeat me," he said. A moral victory, I guess you would call it.

Said Santorum adviser Santorum John Brabender to BuzzFeed: Romney "comes across as the rich kid who shows you all his toys and then takes your toys away."

Romney's other misstep came when Jon Huntsman tried to settle a score from the previous night's debate. "I was criticized last night by Governor Romney for putting my country first," Huntsman said. "He criticized me while he was out raising money for serving my country in China. Yes, under a Democrat. Like my two sons are doing in the United States Navy. They're not asking what political affiliation the president is. I want to be very clear with the people here in New Hampshire and this country: I will always put my country first.”

Romney saw the pitch and took a swing: “I think we serve our country first by standing for people who believe in conservative principles and doing everything in our power to promote an agenda that does not include President Obama's agenda.”

At the Daily Beast, John Avlon was shocked. "That is the opposite of John McCain’s 2008 campaign slogan, 'Country First,'" Avlon wrote. "Romney’s answer is 'Party First,' 'Ideology First.' And what’s arguably even worse is that Romney probably doesn’t even believe that. He’s a pragmatist in office—but the salesman in him can’t let a pander go by even if it conflicts with his principles.

That's not an answer that plays particularly well in independent-minded New Hampshire. Nor is it an answer that plays particularly well in the general election. The counterargument, of course, is that Romney doesn't really believe it. Or, at the least, he'll stop believing it once he's done with the Republican primary. But that doesn't make for a very good bumper sticker. "Mitt Romney: Not as bad as he says he is!"

Top stories

1) Unemployment fell in December reports Shalia Dewan: "Employers in the United States added 200,000 jobs last month, the Labor Department said Friday, a report that came on the heels of a flurry of heartening economic news and signaled gathering momentum in the recovery. Consumer confidence lifted, factories stepped up production and small businesses showed signs of life. The nation’s unemployment rate fell to 8.5 percent, its lowest level in nearly three years...Among the pieces of good news in Friday’s report is that the drop in the jobless rate came largely from real gains, not from discouraged workers giving up the job hunt. The new jobs were spread broadly across industries, with transportation and warehousing, retail, manufacturing and restaurants all adding jobs. In addition, average wages on private payrolls ticked up by 4 cents an hour, though over the year wages have not kept pace with inflation. And government downsizing, which has been a drag on the jobs numbers, slowed in December, with only 12,000 public jobs lost. The private sector added 212,000 jobs. In another positive sign, the unemployment rate seemed to be dropping at a faster rate than the number of new jobs would imply. New businesses and the newly self-employed are less likely to be counted by the Labor Department’s survey of businesses, from which the job numbers are drawn, than by the department’s survey of households, from which the unemployment rate is calculated. The December rate of 8.5 percent was down from a revised 8.7 percent in November."

@justinwolfers: Why did the unemployment rate fall? Household employment rose 176k while labor force declined 50k. So most of this is a "real" decline.

@BetseyStevenson: All the gain in empt in this report was for those w/ educ--loss of 204K jobs for high school & below, gain of 301K for some college & above

2) But the effects of unemployment will last for years reports Ben Casselman: "The U.S. job market is showing signs of a sustained recovery. But the country's prolonged struggle with unemployment will leave scars that are likely to remain for years, if not generations...Unprecedented rates of long-term unemployment could threaten the economy's recent gains. Some 5.6 million Americans have been out of work at least six months, 3.9 million of them for a year or more. Research shows that the longer people are unemployed, the less likely they are to find jobs. Economists aren't sure why--to what degree it's because workers' skills deteriorate, or because they find ways to cope and give up looking for work, or whether the stigma of being unemployed for so long makes companies unlikely to hire them--but the effect is the same: Many of the people out of work the longest likely will never work again. The risk, economists say, is that the U.S. will develop an underclass of semipermanently unemployed workers, with severe consequences for productivity, public finances and even social stability. Europe, which faced a similar problem in the 1980s, is still dealing with the consequences."

@ryanavent: Yes, folks, 200k jobs a month isn't enough. That's why it's interesting to see *accelerating* job growth.

@justinwolfers: Big picture unchanged: the US economy is operating well below potential and will continue to do so for many years. Pity the unemployed.

3) Government jobs have seen a record decline over the last three years reports Floyd Norris: "Over all -- including a decline of 12,000 public sector jobs in the Labor Department report for December -- government employment is down 2.6 percent over the last three years, compared to a decline of 2.2 percent in the early Reagan years. That is a record. That record, which will seem a dubious distinction to public-sector employees, is largely a result not of federal policy but of shrinking state governments. State employment fell 1.2 percent in 2011 -- the largest percentage for any year since counting began in 1955. The number is down 2.2 percent over the last three years. It was up 1.2 percent during Reagan’s first three years, declining in only one of the years. Local government jobs used to be deemed super safe. Since the federal government started tracking the statistic in 1955, there have been only six years when local government employment declined. They have come in threes: 1981, 1982 and 1983, the first three years of the Reagan administration, and 2009, 2010, 2011, the first three years of the Obama administration."

@TNYJohnCassidy: Q: Name an unemployed man who definitely won't benefit from the improving economy. A: Mitt Romney.

4) Indiana's "right to work" law is now expected to pass reports Monica Davey: "House Democrats brought state lawmaking to a halt in Indiana for much of this week, refusing for a third straight day on Friday to come out to their chamber floor in a procedural effort to stop 'right to work' legislation at the center of a mounting battle over unions here. But by Friday afternoon Republicans in the Senate succeeded in moving the measure out of a committee to the full Senate, where passage is likely next week. And by the end of the day, even Democrats in the House -- who could face steep fines for not attending the session in the coming days -- seemed to hint that there was only so much they could do to stop the provision from eventual adoption...If approved, Indiana would become the first state in a decade to prohibit union contracts at private-sector businesses from requiring workers who choose not to be union members to pay dues or fees to the union. Twenty-two other states already have such laws, but Indiana would be the first in the Great Lakes manufacturing region, and passage here seems likely to encourage similar efforts already under consideration elsewhere."

5) The S.E.C. is changing its settlement policy reports Edward Wyatt: "The Securities and Exchange Commission, in a fundamental policy shift, said Friday that it would no longer allow defendants to say they neither admit nor deny civil fraud or insider trading charges when, at the same time, they admit to or have been convicted of criminal violations. The change is the first time that the S.E.C. has stepped back from its longstanding practice of allowing companies to settle fraud charges by paying a fine without admitting wrongdoing. The new policy will also apply to cases where a company or an individual enters an agreement with criminal authorities to defer prosecution or to not be prosecuted as part of a settlement...The commission has been sharply criticized, in federal court and on Capitol Hill, for allowing companies to repeatedly settle fraud cases without admitting or denying the charges. Until last week, that policy had been applied even when a company acknowledged the same conduct to another government agency, often the Justice Department."

Top op-eds

1) Reducing poverty must start early writes Nicholas Kristof: "Perhaps the most widespread peril children face isn’t guns, swimming pools or speeding cars. Rather, scientists are suggesting that it may be 'toxic stress' early in life, or even before birth. This month, the American Academy of Pediatrics is issuing a landmark warning that this toxic stress can harm children for life. I’m as skeptical as anyone of headlines from new medical studies (Coffee is good for you! Coffee is bad for you!), but that’s not what this is. Rather, this is a “policy statement” from the premier association of pediatricians, based on two decades of scientific research. This has revolutionary implications for medicine and for how we can more effectively chip away at poverty and crime...This new research addresses an uncomfortable truth: Poverty is difficult to overcome partly because of self-destructive behaviors. Children from poor homes often shine, but others may skip school, abuse narcotics, break the law, and have trouble settling down in a marriage and a job. Then their children may replicate this pattern. Liberals sometimes ignore these self-destructive pathologies. Conservatives sometimes rely on them to blame poverty on the poor."

2) Redistribution has unintended consequences writes George Will: "Liberals have a rendezvous with regret. Their largest achievement is today’s redistributionist government. But such government is inherently regressive: It tends to distribute power and money to the strong, including itself. Government becomes big by having big ambitions for supplanting markets as society’s primary allocator of wealth and opportunity. Therefore it becomes a magnet for factions muscular enough, in money or numbers or both, to bend government to their advantage. The left’s centuries-old mission is to increase social harmony by decreasing antagonisms arising from disparities of wealth -- to decrease inequality by increasing government’s redistributive activities. Such government constantly expands under the unending, indeed intensifying, pressures to correct what it disapproves of -- the distribution of wealth produced by consensual market activities. But as government presumes to dictate the correct distribution of social rewards, the maelstrom of contemporary politics demonstrates that social strife, not solidarity, is generated by government transfer payments to preferred groups."

3) Republicans don't care about equal opportunity writes Paul Krugman: "Last month President Obama gave a speech invoking the spirit of Teddy Roosevelt on behalf of progressive ideals -- and Republicans were not happy. Mitt Romney, in particular, insisted that where Roosevelt believed that 'government should level the playing field to create equal opportunities,' Mr. Obama believes that 'government should create equal outcomes,' that we should have a society where 'everyone receives the same or similar rewards, regardless of education, effort and willingness to take risk.' As many people were quick to point out, this portrait of the president as radical redistributionist was pure fiction. What hasn’t been as widely noted, however, is that Mr. Romney’s picture of himself as a believer in a level playing field is just as fictional. Where is the evidence that he or his party cares at all about equality of opportunity?...Think about it: someone who really wanted equal opportunity would be very concerned about the inequality of our current system. He would support more nutritional aid for low-income mothers-to-be and young children. He would try to improve the quality of public schools. He would support aid to low-income college students. And he would support what every other advanced country has, a universal health care system, so that nobody need worry about untreated illness or crushing medical bills. If Mr. Romney has come out for any of these things, I’ve missed it."

4) The Washington area must nurture an entrepreneurial tech culture writes Steven Pearlstein: "Local economic boosters love to remind anyone who will listen that the Washington region boasts the greatest concentration of technical or knowledge workers in the country. The implication, of course, is that we’re right out there on the technological edge alongside Silicon Valley, Austin and Boston. It makes for a wonderful marketing story, but it’s fundamentally misleading. What the numbers don’t tell you is that almost all of this high-tech work is done for the government -- and therein is the problem. For even with this impressive ecosystem of firms, workers and advanced technology, the region hasn’t yet spawned a critical mass of companies providing technology products and services for consumers and private businesses...The reality is that firms and workers that thrive in a government-contracting environment are almost antithetical to the ones developing new apps for the iPhone or even a new database-management system for Macy’s. The customer base, the timelines, the marketing, the skill sets, the way products are priced and employees are paid -- they’re all quite different. As former Lockheed chairman Norm Augustine used to quip, the history of 'diversification' by government contractors is unblemished by success."

5) Confused by Ron Paul's occasional mentions of Austrian economics? Matt Yglesias has you covered :"For starters, it’s important to note that the term has something of a double meaning. The Austrian school originally referred to a set of classical liberal thinkers with diverse interests who came out of the Austro-Hungarian Empire. Many of these thinkers are obscure today, but the most distinguished member of the group, Friedrich Hayek, is anything but. By the same token, an appreciation for Hayek’s work by no means makes you an “Austrian.” Hayek, who died in 1992, won the Nobel Prize, and mainstream economists thoroughly embraced his important work explicating the role of the price system in conveying information. His ideas undergird everything from carbon taxes to wireless spectrum auctions and thoroughly permeate policy throughout the Western world. But 'Austrians' in Paul’s sense refers to something narrower, specifically the thought of Ludwig Von Mises and his student Murray Rothbard. It is a form of capitalism that is even more libertarian and anarchic than that espoused by many libertarians. Rothbard‘s followers, most prominently longtime Paul associate and founder of the Mises Institute Lew Rockwell, have been waging a decades-long war against the Koch brothers and the more mainstream form of libertarianism the Kochs represent.

Manhattan rock interlude: Jeff Buckley plays "So Real" live on WHFS.

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Still to come: The Euro's decline; health reform briefs; a pay raise for federal workers; renewables gain; and a hamster powers a submarine.


Military spending cuts could slow innovation reports Binyamin Appelbaum: "As the Pentagon confronts the prospect of cutting its budget by about 10 percent over the next decade, even some people who do not count themselves among its traditional allies warn that the potential impact on scientific innovation is being overlooked. Spending less on military research, they say, could reduce the economy’s long-term growth. 'If catalyzing innovation is going to be an important part of our economic strategy, then we better be careful how we handle' the military budget, said Daniel Sarewitz, director of the Consortium for Science, Policy and Outcomes at Arizona State University. 'I’d like to see a lot less weapons and a lot less focus on them, but it’s not all about that.' In the political debate over Pentagon cuts, the potential effect on innovation has been largely ignored. Pentagon officials and their allies have instead warned that a sharply smaller military budget would expose the nation to harm, and that such cuts would result in a large and immediate rise in unemployment."

A counterargument: http://wapo.st/wAr8ET

The euro may be entering a long-term decline reports Howard Schneider: "Through two years of crisis, the embattled euro has stayed comparatively strong against the dollar, falling as Europe lurched from one difficulty to another but always rebounding. But in recent weeks, the currency has begun a downward slide that some analysts see as longer lasting, reflecting the region’s worsening economic conditions. A corrosive dynamic could be taking hold with European governments adopting austerity measures, banks scaling back credit to meet new regulatory demands and households and companies hunkering down for a possible recession. 'Euroland’s credit crunch and resulting depression have already begun,' High Frequency Economics analyst Carl Weinberg wrote in a paper. He noted that the hundreds of billions of dollars being injected into the European financial system by central banks is not showing up in the economy. 'In normal times, banks are keen to lend any excess reserves,' Weinberg wrote. 'In present times, that ain’t happening: reserves are soaring, lending is not.' He suggested that the region was falling into a full-fledged 'liquidity trap' where the widespread desire to hold onto cash and cut spending leaves everyone poorer."

Fed officials continued their push for action on housing report Nick Timiraos and Luca Di Leo: "Top Federal Reserve officials ramped up their call for more forceful government action to fix the broken housing market, expressing frustration that it is blunting their extraordinary efforts to boost the economy. The three speeches Friday marked the latest moves in an increasingly aggressive campaign by Chairman Ben Bernanke and other Fed officials to push the White House, Congress and regulators to address the problems of the housing market...Moving so aggressively into housing policy risks opening the Fed to criticism that it is exceeding its traditional mandate of keeping unemployment and inflation low. But top Fed officials argued that housing woes are undermining the effects of their policies, such as holding short-term interest rates near zero and using securities purchases to push down long-term rates."

The IMF is lowering its forecast for growth in 2012 reports Patrick McGroarty: "The International Monetary Fund will lower its forecast for global growth in 2012 later this month as the crisis emanating from Europe continues to threaten economies as far-flung as South Africa and its less-developed African neighbors, the fund's chief said Friday. South Africa and other African nations 'will clearly suffer setbacks if the European crisis is not addressed promptly,' IMF Managing Director Christine Lagarde said on a visit to Pretoria. She added that the IMF was looking to lower its forecast for global growth in 2012 below the 4% mark it foresaw in its September World Economic Outlook. 'The IMF is going to be very attentive to the role played by banks, particularly in trade finance,' she said, referring to the business of funding export contracts, traditionally dominated by European banks now reeling from the euro debt crisis."

Interspecies friendship interlude: A dog and a baby play together on the floor.

Health Care

The Obama administration filed its opening health reform brief with the Supreme Court reports Robert Barnes: "Congress was 'well within' its constitutional powers when it decided that the way to resolve a crisis in health-care costs and coverage was to mandate that Americans obtain insurance or pay a fine, the Obama administration told the Supreme Court on Friday. The government filed its opening brief in the battle over the 2010 health-care overhaul, which has become the most controversial accomplishment of President Obama’s domestic agenda. Its resolution will define the court’s term...The brief echoed the themes the administration has sounded in defending the Affordable Care Act through legal challenges throughout the country. But the new brief seemed to more fully embrace the argument that the act was also justified by Congress’s taxing powers. Supporters of the legislation were more reluctant at the time it was passed to refer to the fines that would be levied on those who failed to obtain health insurance as a tax."

FAQ: Sarah Kliff has the answers to all of your health reform lawsuit questions.

HHS has granted its final health reform waivers reports Sam Baker: "Roughly 1,200 companies received waivers from part of the healthcare reform law, the Health and Human Services Department said Friday. Friday marks the last time HHS will have to update the total number of waivers, putting to rest a recurring political firestorm. The department had been updating its waiver totals every month, prompting monthly attacks from the GOP. Republicans say the need for waivers proves that the healthcare law is unworkable. HHS argues that the waivers show the law provides flexibility. All told, 1,231 companies applied for and received waivers from the law’s restrictions on annual benefit caps. The law requires plans to gradually raise their benefit limits, and all annual limits will become illegal in 2014. Companies that received waivers can keep their caps intact until 2014."

Domestic Policy

The White House will propose a pay raise for federal workers reports Ed O'Keefe: "After a two-year freeze in federal workers’ salaries, President Obama will propose a 0.5 percent pay increase for civilian employees as part of his 2013 budget, senior administration officials said Friday. The plan is likely to become part of an election-year confrontation between the White House and Congress over government spending. Republican lawmakers and presidential candidates have called for freezing basic pay rates for at least one more year, with some pitching it as a way to pay for extending the payroll tax cut. Obama called for the pay freeze shortly after the November 2010 midterm elections, saying federal workers needed to share the burden of getting the deficit under control. The proposal disclosed Friday, which requires congressional approval, means that federal civilian employees would get a modest across-the-board pay jump next January."

The Obama administration is proposing a rule to speed the path to a green card reports Julia Preston: "Obama administration officials announced on Friday they are proposing a fix to a Catch-22 in immigration law that could spare hundreds of thousands of American citizens from prolonged separations from illegal immigrant spouses and children. Although the regulatory tweak appears small, lawyers said it would mean that many Americans will no longer be separated for months or years from family members pursuing legal residency. Even more citizens could be encouraged to come forward to bring illegal immigrant relatives into the system, they said...In essence, officials at Citizenship and Immigration Services are proposing to change the procedures by which illegal immigrants with American family members apply for legal residency -- getting a document known as a green card -- allowing a crucial early step to take place in the United States rather than in the immigrant’s home country."

Underwater rodent travel interlude: A hamster powers a submarine.


@mattyglesias : I wish I didn't know about climate change so I could just enjoy this freakishly warm day and not worry about methane feedback loops.

Renewable energy overtook nuclear power in 2011 reports Patrick McGroarty: "In 2011, for the first time in decades, the United States got more of its energy from renewable sources than it did from nuclear power. Not only that, but renewables are growing much faster than any other energy source. Here’s the breakdown: According to the EIA, renewable energy provided 11.95 percent of domestic U.S. energy production through the first nine months of 2011, compared with just 10.62 percent from nuclear. But the trick is defining terms. Wind and solar actually play a very minor role in this story (1.45 percent and 0.15 percent, respectively). The vast bulk of “renewable” power in the United States still comes from large-scale hydropower (4.35 percent), biomass (3.15 percent) and biofuels (2.57 percent). The two things that most people associate with the term 'clean energy' -- namely, wind and solar -- are nowhere close to overtaking nuclear power. Going forward, however, that could well shift. The nuclear industry is more focused on replacing soon-to-retire plants than expanding outright. There aren’t likely to be too many more large-scale hydropower plants in the United States -- the prime hydro sites have all been taken. And as for biomass and biofuel, critics have raised serious questions about whether either of these sources are as sustainable as alleged. On the other hand, solar and wind were by far the fastest-growing energy sources last year -- solar electricity grew 46.5 percent and wind by 27.1 percent (though it’s unclear whether either source can maintain that hectic pace now that Congress has allowed a few key subsidies to expire.)"

DOE decides against auto loan reports Ben Geman: "The Energy Department (DOE) has decided against providing a Michigan company with a $730 million loan to support the manufacture of high-strength automotive steel. The department last June gave Severstal Dearborn LLC -- a subsidiary of Russian steel giant OAO Severstal -- a conditional commitment for the loan to retool and expand facilities in Dearborn, Mich. But a DOE spokesman said the department, after a 'thorough review,' has decided against moving forward with the loan. 'Nevertheless, the project does have merit and has already had some success in obtaining private financing. We hope that the company will remain committed to its investment in Michigan,' spokesman Damien LaVera said."

Wonkbook is compiled and produced with help from Karl Singer and Michelle Williams.