The issue at the heart of the controversy over the ``Goals and Directions'' report is: What is the relationship between Theory of Computation and Computer Science. The two reports summarized in the first issue of the newsletter stake out extreme positions: one arguing that TOC should be integrated into CS, and the other arguing that TOC should be an independent discipline.
In one sense, the debate has been very healthy -- it is important for a mature field to understand its identity and to reflect on its role in the wider context of science and engineering. However, on the negative side, the reports have serious flaws which caused polarization of the community, and there has been a concern that the debate itself could weaken the political position of TOC. The debate over the reports has subsided to some extent. For example, at the FOCS 96 business meeting, David Johnson announced that the Goals and Directions report was being ``quietly buried'', having served its purpose of raising discussion.
I disagree with the position taken by Arvind in his response, where he argues that the debate is over the level and mechanism of funding TOC in the US (and consequently, that the debate has only a second order impact on the TOC community in India.) My view is that the debate is over the priorities of the communtity -- is the goal to produce beautiful mathematical theorems, or is it to have impact in the field of computer science and beyond. Needless to say, this is tied into the question of resources, but in a broader sense than just grant funding. For example, hiring priorites, the reward structures in industrial and governmental labs, the scope of conferences, and the Computer Science curricula are all linked to this. This is an important discussion to have, especially considering the tremendous impact, both economic and social, of computing technology.