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Ways of the World

Carol Stone, business economist & active Episcopalian, brings you "Ways of the World". Exploring business & consumers & stewardship, we'll discuss everyday issues: kids & finances, gas prices, & some larger issues: what if foreigners start dumping our debt? And so on. We can provide answers & seek out sources for others. We'll talk about current events & perhaps get different perspectives from what the media says. Write to Carol. Let her know what's important to you:

Wednesday, January 26, 2011

The State of the Union, 2011

Carolyn from New Jersey, a good friend and faithful reader, asks for comment on the State of the Union speech last night – "both of them", she writes. We are pleased to oblige. You let us know – any of you, not just Carolyn! – if you have specific questions beyond our summary comments here.

In a straw poll yesterday by the Wall Street Journal, they suggested several terms readers could choose to describe "the state of the union"; we picked "improving."

First, the President made some helpful proposals about simplifying tax codes and cutting the overall 35% corporate rate, about emphasizing spending on education and infrastructure and about holding "nondefense, discretionary spending" to current levels for five years. As you might recall from an article we wrote soon after the November election, that segment of spending is a modest fraction of the total budget, but at least these proposals are all concrete ones, generally headed in the direction of deficit restraint. Second, Representative Ryan's response sounded bolder on such deficit-reduction initiatives, but much less specific. He promises a "Budget Resolution" that will quantify what the Republicans intend; we almost can't wait to see this, to see how serious they might really be in designating explicit spending cuts.

In thinking about these issues this morning, as the Dow Jones stock index trades above 12,000 for the first time in over 2-1/2 years, we realize we owe you some commentary too on the economy. We'll do that very soon; suffice it for the moment that new home sales are reported today up unexpectedly for December and other reports have been indicating a firming in consumer and business activity. Such a pattern gives a more constructive backdrop for Congress and the President to establish longer-term government policy trajectories. We look forward to seeing how that plays out. In the meantime, our own views on several crucial issues, such as social security, health care and the deficit itself are contained in Ways of the World articles on September 1, 2010, March 22, 2010, and that November piece, respectively.

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