The state of housing
The U.S. housing market continues to struggle as home prices keep falling.
January 25th, 2011
01:44 PM ET

The state of housing

The housing market is a major indicator of economic strength.

Is that market better today than it was a year ago? Existing home sales are expected to increase 5% to 10% in 2011, according to the National Association of Realtors, and the National Association of Home Builders says new home starts are expected to increase by 21%.

"But what you have to realize is that the bar is so low from last year, that it's not much to talk about improvement," said Guy Cecala, CEO and publisher of Inside Mortgage Finance. "We're improving from a terrible situation, but we're far, far away from any of the housing signs that we saw as recently as three or four years ago."

It is not a healthy market. Foreclosures continue to be a big problem. CNNMoney's Les Christie says 11 million to 12 million homes are still on the brink of repossession.

It all hinges on economic recovery.

"If fewer jobs are lost, there will be fewer foreclosures," Christie said. "If home prices start to rebound, there will be fewer," he said

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The state of war and defense
President Obama greets U.S. troops in Afghanistan during a December visit.
January 25th, 2011
01:09 PM ET

The state of war and defense

President Obama is looking to put the finishing touches on the U.S. military presence in Iraq. A year ago, troop levels were at 112,000, slowly dwindling to the long-stated goal of getting U.S. combat forces out.

Last summer, the transition was officially completed, leaving about 50,000 American troops solely in advisory roles.

Meanwhile, the State Department is sending in a like number of civilian workers to try to build a politically stable Iraq.

"However, the Republicans in the House have been talking very loudly about significantly reducing State Department spending," points out Winslow Wheeler of the Center for Defense Information. "And they haven't specified how that might affect State Department activities in Iraq."

Obama wants to do for Afghanistan what's been done in Iraq, withdrawal-wise. He's planned to start reducing combat forces in Afghanistan in the coming summer, with the goal of having Afghans in control of their own security three years later.

However, Wheeler says U.S. efforts to train and motivate Afghan security forces are going "not at all well." The president's own troop surge has helped rout some Taliban and al Qaeda strongholds, but Wheeler worries that reports of how Afghan security personnel perform "vary from not very helpful to completely useless."

The president's upcoming budget proposal is expected to call for $150 billion in military spending to go to the two hot spots. In the war zones, cost-cutting gives way to the universal notion that you send whatever it takes to support troops in harm's way.

But when it comes to overall defense spending - 20 percent of the nation's budget - even Republicans are starting to question some of what the Pentagon spends and whether all programs are worth it.

On "Meet the Press" on Sunday, House Majority Leader Eric Cantor remarked, "No one can defend the expenditure of every dollar and cent over at the Pentagon. And we've got to be very serious to make sure that they're doing more with less, as well."

Recently, Defense Secretary Robert Gates called for modest defense spending reductions, amounting to about $100 billion over five years.

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Filed under: Barack Obama • Military • Politics • TV-State of the Union