Morning Briefing: February 8, 2012

With US troops withdrawn, the State Department is finding it difficult to do their job in Iraq and is preparing to downsize its staff at the embassy in Baghdad by as much as half in the coming weeks, a stunning reversal after a huge buildup, the New York Times reports.

Members of a bipartisan negotiating committee can’t agree on how to pay for another payroll tax cut extension, dashing “any hope for a quick a quiet resolution” before the current extension expires at the end of the month. Senate Democrats have pledged to put forth their own bill if negotiators can’t agree.

The longest serving person in the U.S. Senate, Sen. Dan Inouye (D-HI) blasted Senate hopeful and former Rep. Pete Hoesktra (R-MI) for his controversial ad playing on Asian stereotypes. “His racist thoughts are not welcome in the United States Senate,” Inouye, who is Asian-American, said.

Rick Santorum swept all three GOP primaries last night in Colorado, Missouri, and Minnesota, dealing a severe blow to Mitt Romney, who has tried to present his nomination as inevitable.

Newly amended forms for the pro-Romney super PAC reveal that another Bain exec and his wife are the people behind a mysterious $250,000 donation.

In its comprehensive examination of federal disclosure forms, the Washington Post has discovered that members of Congress have steered millions of taxpayer dollars to institutions where their relatives work. The Post found 16 representatives whose actions aided their immediate families.

The CBO on Tuesday reported that the budget deficit fell sharply in January, from $50 billion a year ago to $27 billion last month. The improved numbers were attributable to higher tax collections from individuals and lower outlays. January’s numbers bring the total deficit reduction to around $70 billion for the first four months of fiscal year 2012, which began on October 1.

The government’s proposed settlement with banks over their mortgage and foreclosure practices was dealt another setback last night when New York Attorney General Eric Schneiderman (D) canceled a news conference where he was expected to endorse the deal. Officials are still intent on finalizing the deal this week, even as multiple states continue to holdout.

And finally: Someday, wrestler/actor “The Rock” will save the world, but not yet, he said in a recent interview. “Right now, the best way that I can impact the world is through entertainment,” he said. “One day, and that day will come, I can impact the world through politics. The great news is that I am American, therefore I can become President.”