With Democrats debating out how best to make case that the country is in better shape than it was when Obama took office, Republicans and the Romney campaign are pouncing on this interview, in which the President gave himself an “incomplete” grade on the economy:

QUESTION: Your party says you inherited a bad situation. You’ve had three and a half years to fix it. What grade would you give yourself so far for doing that?
OBAMA: You know, I would say, “incomplete.” But what I would say is, the steps that we’ve taken, in saving the auto industry, in making sure college is more affordable, in investing in clean energy, science, technology, research — those are all the things that we’re gonna need to grow over the long term.

Republicans are contrasting this with an interview Obama gave early in his term, in which he said: “If I don’t have this done in three years, then this is gonna be a one-term proposition.” And no question — that contrast is a rough one politically for Obama.

But “incomplete” is the right answer to the question. The President needs to make the case that he’s placed the nation on the path to recovery and has built a foundation for lasting growth — but that there’s still a great deal more to do, and that changing course now would upend the progress that has been made.

One formulation you’ll be hearing a lot more of in the coming days: “we’re recovering too slowly; there’s still a lot more work to be done.” That’s a way of arguing that the country is moving in the right direction, and that we need to build on the current approach, rather than go back to one that failed us last time — while still respecting the economic struggles many Americans continue to endure.

There’s no denying that the box Republicans have built — Obama himself said that if he doesn’t get it done, we should replace him; now even Obama admits he hasn’t completed the job — is a difficult one for Obama to argue his way out of. The question is whether Republicans have grown overly confident in Obama’s inability to get swing voters to take a longer view or in the assumption that these voters will allow this box to define the choice they face.

The GOP theory of the race on the economy is that the swing voters who will decide this election can be persuaded the Obama presidency is a failure — minimizing the GOP need to offer a credible and meaningfully fleshed out alternative for the middle class. The Dem theory of the race is that these voters, as disappointed as they are, won’t quite reach this conclusion — and will conclude that the GOP alternative has been economically discredited and wouldn’t prioritize protecting middle class interests. The Dem theory is that voters will also give Obama an “incomplete,” but conclude that this is a pretty decent grade, given the circumstances — and that he is the one who truly has their interests at heart and has earned a chance to finish what he started.

* It’s Michelle Obama’s night: Krissah Thompson has an interesting look at the challenges she faces with her convention speech tonight: She needs to make the case to undecided female voters that Dems truly represent their interests, without wading too deeply into the polarizing battles over women’s health and abortion.

Ms. Obama’s speech will be geared towards shoring up her husband’s image among independent women by talking about the values and judgment that drive his decision making and vision for the future. Dems believe independent women represent a large chunk of the truly undecided voters that will decide the election.

* How specific will Dems get at their convention? Alexis Simendinger reports that the convention will place a heavy emphasis on drawing a clear road map for what middle class Americans can expect from a second Obama term, on issues such as Medicare, health care for women, student loans, consumer protections and other areas — and Obama’s team believes this is the route to victory.

Dems (and some Republicans) believe Romney erred badly by failing to offer a clearer picture of what he would do on the economy. The question is whether Dems will capi­tal­ize on by clearly showcasing their own alternative.

* Ryan again hits GM tale: Ryan, on Good Morning America, blasts Obama again over the closed Janesville plant:

“After the plant was shut down he said he would lead an effort to retool the plant to get people back to work. They’re still not back to work,” he said. “I really ask the 23 million people George who are struggling to find work in America today if we’re better off than we were four years ago?”

The argument is that Obama didn’t honor his promise to retool the plant. But there is still the implication that the Obama economy is somehow responsible for the plant remaining closed — which remains unclear.

* Biden blows it on the Bain “bailout”: As Glenn Kessler documents, that recent Rolling Stone article documenting the limits of Romney’s “turnaround whiz” routine is interesting, but Joe Biden stretches the truth when he says Romney’s rescue of Bain and Company involved a taxpayer bailout.

* About Romney’s promise of 12 million new jobs: Eugene Robinson:

This sounds ambitious and bold until you do the math. To reach that goal in the 48 months of a presidency would mean an average of 250,000 new jobs each month — a healthy but not outlandish number. In essence, Romney is simply betting that the anemic economic recovery now under way will become a healthy one.

What’s more, economists predict that the economy will create 12 million new jobs with or without any Romney turnaround wizardry.

* Obama needs to get more aggressive about GOP falsehoods: Mike Tomasky details the five GOP claims Obama must do a better job of challenging. Still unknown: How aggressively will Bill Clinton challenge the Great Welfare Lie?

* Why “are you better off” is the wrong question: Nate Silver shows that “are you better off than you were four years ago is not what motivates voters; rather, it’s perceptions of the current and very recent direction of the economy that drive them.

However, Silver offers a warning: A big Thursday speech followed by a bad jobs report this Friday could give Republicans ammo to argue that all they heard the night before were airy promises.

* And GOP keeps wishing Obama were Jimmy Carter: Paul Ryan, on the campaign trail:

“Simply put, the Jimmy Carter years look like the good old days compared to where we are right now.”

This, along with the revival of the “are you better off” question, shows how much Republicans are staking on the idea that this election will be 1980 all over again. Ryan’s claim unlikely to resonate with swing voters’ perceptions of Obama or the economy — yet another instance of Republicans operating from the assumption that they can be persuaded to view things the way the GOP base does.

What else?