Good morning! Here’s what you need to know.
1. Forces loyal to Libyan strongman Muammar Qaddafi have retaken the key oil port of Ras Lanouf along the coastal road leading to the nation’s capital. NATO aeroplanes are reportedly involved in the fighting.
2. Should the US arm the Libyan “rebels?” Should the US and NATO put “boots on the ground” to tip the balance against Col. Qaddafi’s forces? These two issues are the subject of fierce debate in Washington and within NATO.
3. Tom Friedman, in a column generally sympathetic to President Obama, argues that in order to achieve what the US and NATO hopes to achieve — the removal of Col. Qaddafi from power — the US and NATO will have to put “boots on the ground.”
4. Good news: The Wall Street Journal reports: “State and local tax revenue has nearly snapped back to the peak hit several years ago—a gain attributed to a reviving economy and tax increases implemented during the recession.”
5. Bad news: The Wall Street Journal reports: “Housing prices across the U.S. continued falling in January, raising fears of a double dip in the home-buying market and a longer slog toward recovery than once expected.”
6. Taken together, the good and bad news spell more trouble for America’s 89,000 cities, school districts and other local governments which depend heavily on property taxes. State government finances, which depend largely on income and sales taxes, are healthier.
7. The Washington Post reports: “Having difficulty finding consensus within their own ranks, House Republican leaders have begun courting moderate Democrats on several key fiscal issues, including a deal to avoid a government shutdown at the end of next week.”
8. Pressure from the Tea Party has caused a split within the House Republican leadership. Majority Leader Eric Cantor says that “a short-term continuing resolution without a long-term commitment is “unacceptable” and that the leadership must push for the full $61 billion in spending cuts approved by the House last month.”
9. A pro-union State Supreme Court Justice candidate appears to be on the verge of a big win in a special election in Wisconsin. Such a result would be a blow to Gov. Scott Walker (R).
10. Night follows day. Budget negotiations in California collapsed. Each side accused the other of intransigence.
# Martin Wolf on what is required for the EU’s “grand bargain” to stick.
# Wolfgang Munchau on why the “grand bargain” won’t stick.
# Lex on why Portugal should get out of the “grand bargain” business and allow itself to be annexed by Brazil.
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