Allowing the Defcon/Threat Level changes twice per day to eliminate the update penalty. Many players cannot be on at update due to their timezones. Those that can, change their Defcon/Threat Level before the update, collect taxes after the update, and change the Defcon/Threat back after the update. Players that can't be on at update are forced to collect less in the way of taxes or expose their nations to potential attacks leaving themselves at a disadvantage to other players who are on at update.

Spy attacks should still freeze Defcon/Threat Levels for a day.

Not really, you can collect then change to DEFCON 1 one day then the next change back to DEFCON 5 and collect. It provides DEFCON 1 protection half the time. Two changes in a day sort of defeats the happiness penalty purpose.

The point I'm getting at is the happiness penalty unfairly hurts people who do not live in time zones where they can be online at update. Those that can be online at update avoid the penalty, thus giving them a significant advantage.