Mellody's Math: State of Your Economic Union

When President Bush delivered his State of the Union address Tuesday, he devoted equal time to national, homeland and economic security.

But with recent polls indicating citizens consider the economy a bigger concern than a threat of future terrorist attacks, viewers likely turned up the volume on their televisions for the third leg of this stool.

Here's a look at how some of the things Bush told Congress and the nation may reach into your own pockets:

Deficit But No New Taxes: At the outset, Bush acknowledged that the U.S. economy is in recession, the first since the president's father delivered his own State of the Union address almost a decade ago.

A year ago, things could have not been more different. But due to the terrorist attacks and the ongoing war, what was then a budget surplus is now expected by the White House's budget office to be budget deficits until the year 2005.

Remarkably, Republicans and Democrats alike agree that having a deficit is a necessary means to protect the American people's personal and economic security. Running the country at a deficit means budget cuts will likely be buffered by spending increases in other programs.

White House to Your House: Be on the lookout for cuts in some social programs. For example, the president's new budget is expected to cut $850 million from education and training assistance programs.

Job Creation: In describing his economic security plan, Bush stated that it can be "summed up in one word: jobs." But the president has a serious task on hand, as 1.4 million people have lost their jobs in recent months, while others remain fearful for their own job security.

Over the past year, America has been awash in downsizing. With almost daily announcements of company lay-offs and plant closings, America needs economic growth to help create new jobs. The president concurred the best way out of a recession is to create jobs and to encourage investment in factories and equipment.

White House to Your House: For everyday Americans, this is good news. If the president and Congress can agree to an economic stimulus package that actually stimulates the economy, the result will be more jobs and less economic insecurity for all workers.

Keeping the Tax Cuts Permanent: Second only to having a job, taxes are next in the line on most consumers' list of priorities. This year, tax rates are 0.5 percent lower than the previous year, meaning consumers will have more money to take home.

In addition to reducing tax rates, the child credit allowance was doubled and the death tax was repealed. The child tax credit rose from $500 to $600 in 2001 and increases by $100 increments to $1,000 by 2010.

In the president's address, he asked, "For the sake of long term growth and to help Americans plan for the future, let's make these tax cuts permanent." As it stands, the president's overall tax cut, passed by Congress last year, totaled $1.35 trillion and is due to expire in 2011.

In spite of likely fear among consumers of an impending increase in taxes to cover the additional spending proposals, the president has indicated he wants to keep the tax cuts in place.

While the permanence of the tax cuts are a divisive issue between the two parties, consumers, for the time being, can count on seeing lower tax rates. However, in a recent ABCNEWS/Washington Post poll, 55 percent of Americans favor reducing the tax cut to keep the budget balanced. Despite varying opinions on the need for a tax cut, consumers are the beneficiaries with more money in their paychecks and less money withheld from them.

White House to Your House: In terms of one's own personal finances, these tax breaks are in place to encourage consumer spending. Stay tuned for an extended debate on taxes, with both parties vying for voter support of their proposals.

Protecting Your 401(k) and Pensions: In the wake of the Enron debacle, the nation's largest ever bankruptcy, thousands of its employees were left without retirement plans prompting Bush to call for the need to enact new safeguards for 401(k) and pension plans.

More than 40 million employees have access to corporate 401(k) savings plans, representing nearly $2 trillion in assets. Enron proved why employees need to be well versed on their retirement savings.

The Democratic response, delivered by House Minority Leader Dick Gephardt, went even further with regards to retirement protection. Gephardt voiced support for a universal pension system that would follow workers from job to job and protect them from "the next Enron."

White House to Your House: Look for Bush and Congress to propose legislation that may limit the amount of company stock permitted in 401(k) plans. In addition, the president spoke of a need for corporate America to be made more accountable to employees and shareholders. These sentiments are likely to usher in accounting standards and disclosure requirements-both good things for the American consumer.

Retirement Security: Retirement security, as Bush stated, also "depends upon keeping the commitments of Social Security."

Between 2010 and 2030, the number of elderly Americans will rise by 82 percent, while the working age population will grow by just 5 percent. This equates to a severe strain on the resources for social security and a wide disparity between the money taken out and the money coming in. In line with Bush's theme of job creation, he also indicated that a good job should lead to security in retirement.

White House to Your House: In this vein, Bush suggested allowing younger workers to set up personal retirement accounts. These personal retirement accounts are germane to the controversial issue of privatizing social security-another issue that is sure to be discussed in coming months. Whether it is a Democrat or Republican proposal or bill, partisanship will most likely take a back seat, as it is doing in many of the president's other initiatives, to an expanded safeguard of employee retirement assets.

Mellody Hobson, president of Ariel Capital Management in Chicago, is GoodMorning America's personal finance expert. Click here to visit her Web site, Ariel Mutual Ariel associates Matthew Yale and Anne Roche contributed to this report.