If Mitt Romney loses in Michigan tonight -- and, to some degree, even if he wins -- the GOP is caught between three seemingly impossible alternatives.



Republican presidential candidate, former Massachusetts Gov. Mitt Romney prepares to greet supporters during a campaign rally Feb. 27 in Albion, Michigan. (Justin Sullivan/GETTY IMAGES)

Another option is Republican voters nominate Rick Santorum. Rick Santorum, who lost his reelection campaign in Pennsylvania by 18 points -- the largest margin of defeat for an incumbent senator in decades. Rick Santorum, who was a key player in the K Street Project that helped bring down the Republican Party in 2006. Rick Santorum, who says the use of birth control is "not okay." Rick Santorum, a BA/MBA/JD who is trying to recast rhetoric promoting college as a cultural affront propagated by "snobs" who want to indoctrinate children. Rick Santorum, who says "Satan is attacking the great institutions of America," provoking even Rush Limbaugh to caution that that's “not the kind of stuff you hear a presidential candidate saying.”

Another option -- and no, I don't consider a Newt Gingrich nomination to be even a remote possibility -- is that another candidate enters the race after Michigan in an attempt to force a contested convention. But which candidate? And why? Right now, both Romney and Santorum have significant money, committed gressroots backers, and national campaign organizations. This new candidate would have none of that. Both Romney and Santorum are now experienced at attacking, debating, and otherwise dispatching weak candidates. This new candidate would somehow have to survive that. A contested convention would lead to a divided and angry Republican Party. This new candidate would somehow need to surmount that. The economy is improving and Obama's numbers are rebounding. This new candidate would then have to somehow overcome that. It's not a situation that seems likely to entice a top-tier recruit into the field -- and that's assuming there even was a top-tier choice to recruit!

Of course, the fact that all these outcomes seem impossible doesn't mean that any of them are. In fact, one of them is going to happen. The InTrade betting markets still give Romney a 71 percent chance of capturing the nomination. They give Santorum a 11 percent chance. No one else breaks four percent. And that's helping Obama. InTrade now gives him a 61 percent chance of winning reelection.

Top stories

1) The GOP primary moves to Michigan and Arizona today, report Janet Hook and Neil King Jr.: "Michigan's Republican presidential primary Tuesday is more than a test of Mitt Romney's ability to win his native state. It is a test of a central thesis of his campaign: He has the best chance of beating President Barack Obama. The results will show whether Mr. Romney--the longtime GOP front-runner now locked in a close race nationally with former Sen. Rick Santorum--can win the blue-collar voters who are a pivotal bloc in the Midwest, where parties win or lose presidential elections...In Arizona, which also holds a primary Tuesday, polls show Mr. Romney with a wide lead. But it is Michigan, whose electorate more closely matches swing states such as Ohio, and where the two men have chosen to engage each other, that will show the measure of the candidates."

Nate Silver lays out Michigan's delegate rules: "Twenty-eight of the 30 delegates in Michigan’s Republican primary will be awarded, two at a time, to the winner in each of the state’s 14 Congressional districts; only two will go to the candidate who takes the most votes statewide."

@FiveThirtyEight: "Romney has regained a commanding 0.7 point lead in our Michigan forecast after adding that Baydoun poll. http://nyti.ms/zQlUB3"

@davidaxelrod: So,I guess tomorrow's the day Mitt finds out if his support in Michigan is the right height?

2) Germany’s parliament approved the Greek bailout, reports Michael Birnbaum: "Germany’s parliament overwhelmingly approved its country’s contribution to the Greek bailout on Monday, serving as a reminder that, for all of Germany’s caution about funding its poorer neighbors, Europe’s largest economy is still willing to muster billions to aid others. The $174 billion rescue package was approved despite weeks of threats to let Greece default on its debt, with just 90 votes of dissent and five abstentions out of 591 members of parliament present for the vote. The vote in Germany -- which guarantees about a quarter of Europe’s existing rescue fund -- was seen as among the biggest tests for the bailout agreement, Greece’s second one in two years...Few leaders expect the agreement to deal a decisive blow to Greece’s economic troubles, and other countries, such as Portugal, might also need more aid."

@Austan_Goolsbee: A headline that will repeat many times (and for many countries) if Euro is to survive next 5 years: Germany approves Greek bailout

3) Pressuring is growing on Fannie and Freddie to allow debt reduction, reports Shaila Dewan: "California’s attorney general, Kamala D. Harris, has ratcheted up the pressure on Fannie Mae and Freddie Mac to allow debt reduction on their home loans by asking the mortgage finance giants to halt foreclosures in the state. In a letter to Edward J. DeMarco, the regulator who controls Fannie and Freddie, Ms. Harris asked that foreclosures be suspended until his agency, the Federal Housing Finance Agency, completes a promised review of its policy forbidding debt reduction for delinquent homeowners who owe more than their home is worth...Mr. DeMarco has come under increasing pressure to allow debt forgiveness, also called principal reduction, since the announcement of a multibillion-dollar foreclosure abuse settlement that requires banks to write down mortgage debt for some eligible homeowners. Loans backed by Fannie and Freddie -- more than half of all outstanding mortgage loans -- are not eligible for relief under the settlement."

4) Efforts to streamline government are making little progress, reports Jeffrey Sparshott: "Washington has a long way to go to reduce the duplication among federal programs that ends up costing taxpayers billions of dollars a year, according to government reports to be released Tuesday. Examples of such overlap cited in one report from the Government Accountability Office are 53 programs to help entrepreneurs, 15 unmanned-aircraft programs and more than nine different agencies involved in protecting food and agriculture systems from disasters and terrorist attacks. The document is a follow-up to a similar report issued almost a year ago by the GAO, the investigative arm of Congress, which presented a template for lawmakers of both parties to cut federal spending and consolidate programs to reduce the federal budget deficit...Agencies cited in the report alternately accepted some GAO criticism, said they were making progress or rejected parts of the report."

5) TransCanada is pushing forward with Keystone XL, report Juliet Eilperin and Steven Mufson: "The Canadian firm hoping to build a massive oil pipeline from Canada to the U.S. gulf coast announced Monday that it will push ahead with plans to construct the segment running from Cushing, Okla., to Port Arthur, Texas, and will apply for a federal permit for the cross-border section of the pipeline. The move by TransCanada would alleviate the glut of oil at Cushing, a major terminal, and address one of the main reasons for building the controversial Keystone XL pipeline. The $2.3 billion pipeline will transport 700,000 barrels per day starting in mid- to late-2013. Plans for the segment of pipeline crossing the U.S.-Canada border would come 'in the near future' the company said...In a statement Monday, White House spokesman Jay Carney said Obama welcomes TransCanada’s plans for the southern pipeline segment, and he pledged that the new application for the cross-border section would receive a thorough assessment."

Top op-eds

1) Romney's budget plan doesn't add up, writes Ezra Klein: "As a matter of theory, stronger economic growth could make Romney’s plan work. When growth is faster, revenue rises and social spending falls. That’s why, historically, America’s deficits fall when growth is quick and rise during recessions. So if Romney really could double or triple the pace of economic growth, it would be much easier to make his numbers add up. The problem is that there is no tax policy that can dramatically accelerate growth...The technical term for the secret sauce that Romney is using in his budget projections is 'dynamic scoring.' The idea is that tax cuts make the economy grow faster...There are good reasons to wish economists were better at predicting the effect that policies will have on economic growth. But there are even better reasons to mistrust politicians who predict their policies will have huge effects on economic growth, and whose numbers don’t add up in the absence of those assumptions. If dynamic scoring is how Romney makes his numbers work, then his numbers don’t work."

@sethdmichaels: "Dynamic scoring" is a very fancy way of saying "because I said so" that we are supposed to take seriously.

2) Housing is holding back the recovery, writes Robert Reich: "The biggest continuing problem for most Americans is their homes. Purchases of new homes are down 77 per cent from their 2005 peak. They dropped another 0.9 per cent in January. Home sales overall are still dropping and prices are still falling - despite already being down by a third from their 2006 peak. January’s average sale price was $154,700, down from $162,210 in December. Houses are the major assets of the middle class. Most Americans are therefore far poorer than they were six years ago. Almost one out of three homeowners with a mortgage is now 'underwater'...Under these circumstances it is not enough to rely on low interest rates and to make it easier for homeowners who have kept up with their mortgage payments to refinance their underwater homes, as the Obama administration has done. The government should also push to alter the federal bankruptcy law, so homeowners can use the protection of bankruptcy to reorganise their mortgage loans."

3) Cash transfers are the best way to help the poor, writes Edward Glaeser: "Cash transfers are more effective at helping the poor than in-kind gifts, such as food stamps and housing vouchers. I am grateful for the freedom I enjoy when spending my earnings; surely, aid recipients also like autonomy. They can choose the spending that best fits their needs if they are given unrestricted income. In 'Free to Choose,' this logic led Milton and Rose Friedman to argue for 'replacing the ragbag of specific programs with a single comprehensive program of income supplements in cash.' Yet over the past 40 years, in-kind programs have grown steadily more important than cash transfers. In 1968, the last year of Lyndon Johnson’s presidency, the federal government spent $1.61 billion ($10.5 billion in 2012 dollars) on Aid to Families with Dependent Children (the predecessor of Temporary Aid to Needy Families); it spent $1.81 billion ($11.8 billion in 2012 dollars) on Medicaid and $505 million ($3.3 billion in 2012 dollars) for food and nutrition assistance."

4) The GOP shouldn't be afraid to debate inequality, writes Marc Thiessen: "Instead of defending income inequality, Republicans should be turning Obama’s income-inequality attack around on him. They should be saying: Mr. President, your policies exacerbate income inequality. Since you took office, 2.6 million Americans have fallen beneath the poverty line. Government dependency is at an all-time high. Nearly 13 million are unemployed, and millions more are under-employed -- working part time because they can’t find a full-time job. Still others have simply given up on finding a job and dropped out of the work force entirely. Our problem isn’t income inequality; it’s income stagnation. The message should be: Mr. President, you’re responsible for this. You are making income inequality worse. Unlike the president, conservatives don’t want to divide up a shrinking economic pie more equitably. We want to grow the pie so everyone gets a bigger slice. We want to see everyone’s income rise."

5) Fiscal integration won't help Europe, writes Martin Feldstein: "The driving force of Europe’s economic policy is the 'European project' of political integration. That goal is reflected in the European Union’s current focus on creating a 'fiscal compact,' which would constitutionalize member states’ commitment to supposedly inviolable deficit ceilings. Unfortunately, the compact is likely to be another example of Europe’s subordination of economic reality to politicians’ desire for bragging rights about progress toward 'ever closer union.'...But, although the current European political process will not create strong fiscal discipline, financial markets are likely to force eurozone governments to reduce their sovereign debts and limit their fiscal deficits. During the single currency’s first decade, private investors’ belief in the equality of all eurozone sovereign bonds kept interest rates low in the peripheral countries, even as their governments ran up large deficits and accumulated massive debt. Investors will not repeat that mistake: once bitten, twice shy. For eurozone governments, that means that financial markets will now enforce what the political process cannot achieve. The EU’s fiscal compact, whatever its final form, will be little more than a sideshow."

Folk interlude: Laura Marling plays "Rest In The Bed" live on WNYC.

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Still to come: Buyers face higher fees on mortgages; at-risk patients draw the attention of insurers; a split on 'open access'; Keystone XL moves forward; and a cat takes a dip in the sea.

Economy

New data is stirring optimism for the housing market, reports Nick Timiraos: "An index that tracks contracts to buy previously owned homes rose 2% in January from December to the highest level since April 2010, rekindling hopes that improving demand will help halt the slide in prices this year. The index of pending home sales, which reflects deals that have signed contracts but haven't yet closed, rose to 97 from 89.8 a year ago, according to the National Association of Realtors. The reading was the highest for any January since 2007, but still remains at historically low levels...Other reasons for caution: Many real-estate agents say a significant share of contracts are falling apart at the closing table. Also, lending standards remain tight, so some buyers can't qualify for loans."

The U.S. is in an era of low borrowing costs, reports Binyamin Appelbaum: "These are the best of times for the world’s most ravenous borrower, the United States of America. A combination of unusual and unsustainable forces has pushed the cost of borrowing as low as it has ever been, so low that many investors effectively are paying to lend money to the government...The Treasury Department, seeking to milk the moment, may start issuing debt with negative interest rates, making investors pay for the privilege of lending money to the government. But a wide range of experts agrees that the bubble will eventually pop. The question, they say, is not if but when. There are signs that the era of low borrowing costs may be approaching its end, as the domestic economy shows signs of strength and Europe pulls back from economic immolation."

Buyers will see higher fees at the F.H.A., reports Tara Siegel Bernard: "Mortgages backed by the Federal Housing Administration -- which allows a smaller down payment and has less stringent credit requirements than traditional mortgages -- are about to get a bit more expensive...The agency announced Monday that it would increase two types of fees that borrowers must pay. The goal, it said, is to help shore up its reserves, which had fallen sharply in the midst of the housing crisis, and to encourage private lenders to wade back into the still-struggling market. More prospective home buyers have been turning to the F.H.A. as other lenders tightened their requirements after the real estate market collapse in 2008. The agency does not make loans, but insures mortgages that meet its guidelines: people with credit scores of 580 or more can put down as little as 3.5 percent. As a result, the number of mortgages backed by the F.H.A. has ballooned, accounting for 40 percent of all new purchase mortgages in 2010, up from 4.5 percent in 2005, agency figures show."

Fannie Mae is selling repossessed homes in a bid to boost housing prices, report Shahien Nasiripour and Nicole Bullock: "Investors will be able to bid for nearly 2,500 repossessed US properties owned by government-controlled mortgage giant Fannie Mae in a pilot programme tailored by the Obama administration to avoid further depressing the housing market. The housing financier is seeking through the initiative, detailed Monday by the Federal Housing Finance Agency, Fannie Mae’s regulator, to sell a portion of the roughly 120,000 foreclosed properties it holds on its books to investors. Buyers must agree to rent out the properties rather than immediately selling them on the open market. By delaying the open market sale of distressed homes, officials hope housing prices will rebound more quickly...The pilot programme is the first of a series of initiatives expected to be launched by FHFA. The next one will probably come in the spring, officials said."

@mattyglesias: EXCLUSIVE: We would have had a deficit grand bargain in 2011 if not for the fact that the parties disagree on spending & taxes.

Hip hop variety show interlude: WPIX's "Graffiti Rock," the full pilot episode.

Health Care

Health insurers are paying more attention to at-risk patients, reports Reed Abelson: "Who doesn’t want to be in the top 1 percent of wage earners, political discomfort aside? No one, though, is especially envious of another group of 1 percenters: the heaviest users of health care. One percent of patients account for more than 25 percent of health care spending among the privately insured, according to a new study. Their medical bills average nearly $100,000 a year for multiple hospital stays, doctors’ visits, trips to emergency rooms and prescription drugs. And they are not always the end-of-lifers. They are people who suffer from chronic and increasingly common diseases like diabetes and high blood pressure. As the new federal health care law aims to expand care and control costs, the people in the medical 1 percent are getting more attention from the nation’s health insurers."

Helping the disabled shouldn't be controversial, writes Harold Pollack: "Mr. Santorum and Ms. Palin are spreading a poisonous meme: that liberals disdain the disabled and look down upon parents who raise children with physical or intellectual limitations. They seek to insert the hateful rhetoric of the culture war into one of the few areas of American life that had remained relatively free of such rancor. Care for people with disabilities has quietly been one of the few causes in this country on which social liberals and conservatives could put aside their differences to get important work done....As a result of this hard work, things have gotten better. Sixty years ago, the birth of an intellectually disabled child was viewed as a private tragedy. Families did the best they could, for as long as they could, or turned to forbidding public institutions for help. Now millions of men and women with intellectual disabilities live with greater dignity with their families or in human-scale group homes in their own communities."

Domestic Policy

Regulators plan to require rearview cameras on cars, reports Nick Bunkley: "On average, two children die and about 50 are injured every week when someone accidentally backs over them in a vehicle, according to KidsAndCars.org, a nonprofit group that pushed the government to begin tracking such tragedies. And more than two-thirds of the time, a parent or other close relative is behind the wheel. Now, auto safety regulators have decided to do something about it. Federal regulators plan to announce this week that automakers will be required to put rearview cameras in all passenger vehicles by 2014 to help drivers see what is behind them. The National Highway Traffic Safety Administration, which proposed the mandate in late 2010, is expected to send a final version of the rule to Congress on Wednesday."

Congress is split over access to government-financed research, reports Guy Gugliotta: "During the next few weeks, the Obama administration’s Office of Science and Technology Policy will submit to Congress a progress report on its search for a balanced approach to the contentious and complex question of how government-financed scientific research should be disseminated in the digital age. Advocates of 'open access,' who include many scientists, libraries and universities, say that reports of scientific discoveries paid for by government grants should be made available on the Web immediately and without charge to anyone who wants to see them. Opponents, which include many private and nonprofit publishers and many professional societies, argue that an unfettered policy would bankrupt journals and make a shambles of the peer-review and article selection system that has served the world scientific community for centuries."

An insider-trading bill may finally move forward, report Anna Palmer and John Bresnahan: "Senate Democratic and GOP leaders are considering taking up a House-passed version of legislation barring insider trading by lawmakers and congressional aides, a move designed to break a deadlock over the high-profile reform bill...The measure would bar lawmakers and their aides from trading stocks, bonds and other financial investments using non-public information. But the House bill, pushed by House Majority Leader Eric Cantor (R-Va.), dropped two key Senate provisions. The first provision was sponsored by Sen. Chuck Grassley (R-Iowa) and required 'political intelligence consultants' to register as lobbyists. Grassley reacted angrily to the House move, saying it was astonishing and extremely disappointing that the House would fulfill Wall Street’s wishes by killing this provision. The House also eliminated Senate-passed language to expand federal prohibitions against bribery, theft of public money, and other public corruption offenses."

Adorable animals going swimming interlude: A cat goes for a swim in the sea.

Energy

Uncertainty over the transportation bill is reaching states, reports Burgess Everett: "After more than 800 days of stopgaps, an impending deadline and a series of delays in the Senate and House, local politicians and transportation officials across the country are grabbing the popcorn. They just don’t know yet whether they are watching a horror flick or a coming-of-age film...Last week’s announcement from House GOP leaders that they’ve given up on a five-year bill and are working on a 'revamped' measure that may match the Senate’s two-year bill is just the latest twist localities are getting used to after eight transportation policy extensions that have hamstrung large projects across the country...Interviews with local, county and state officials across the country show unanimous support for a long-term transportation bill. But because of the hiccups in the House and the possibility the amendment process could bog down the Senate bill, there are a bevy of scenarios to prepare for: passage of either the Senate or House bills, a pre-conferenced bill or another stopgap or more."

BP settlement talks are focusing on the spill fund, reports Tom Fowler: "Settlement talks between BP PLC and lawyers for thousands of individuals and businesses who say they were damaged by the Deepwater Horizon oil spill are focused on roughly $14 billion left in a $20 billion compensation fund BP set up in 2010. If a deal is struck in the federal civil case here, the money would likely go toward paying damage claims through a process overseen by plaintiffs' lawyers, according to people familiar with the situation, who say a settlement may be announced as early as Tuesday. Any settlement also could involve significant additional payments by BP, they said. BP and other companies involved in the spill also face environmental penalties from the federal government that could climb as high as $17.6 billion under the Clean Water Act. The companies also might face criminal charges."

Fracking isn’t going away, writes Joe Nocera: "Fracking isn’t going away. To put it another way, the technique of hydraulic fracturing, used to extract natural gas from once-impossible-to-get-at reservoirs like the Marcellus Shale that lies beneath New York and Pennsylvania, has more than proved its value. At this point, shale gas, as it’s called, makes up more than 30 percent of the country’s natural gas supply, up from 2 percent in 2001 -- a figure that is sure to keep rising. Fracking’s enemies can stamp their feet all they want, but that gas is too important to leave it in the ground. Fred Krupp, the president of the Environmental Defense Fund, understands this as well as anyone. Last summer, he was a member of a small federal advisory panel that was charged by Steven Chu, the secretary of energy, with assessing the problems associated with fracking. The group came up with a long list of environmental issues. But it also concluded, that 'the U.S. shale gas resource has enormous potential to provide economic and environmental benefits for the country.'"

@politicoroger: Can we just cut the baloney on this one subject? The president - - Democrat or Republican - - has very little control over gas prices.

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