President Obama’s job speech reacted to by Heritage Foundation scholars (Part 1)

Everyone wants to know more about the budget and here is some key information with a chart from the Heritage Foundation and a video from the Cato Institute.

I love going to the Heritage Foundation website because of articles like this:

Heritage’s experts watched President Barack Obama’s jobs speech delivered to a joint session of Congress. Here are some of their immediate reactions:

Jobs for Teachers?

In his remarks tonight, President Obama argued that his jobs proposal would create more jobs for teachers. He went as far as to say laying off teachers…”has to stop”.

But since 1970, student enrollment in public elementary and secondary schools has increased just 7 percent, while public elementary and secondary staff hires have increased 83 percent. Moreover, in the 1950′s, there were approximately 2.36 teachers for every non-teacher in a school district. Today, in our nation’s school systems, that ratio is closer to 1 to 1. So every teacher in the classroom has an administrative counterpart in your local public school district. That is a tremendous strain on state budgets. But it is also a huge boon the education unions.

President Obama’s call to spend more precious taxpayer dollars to “prevent teacher layoffs” may do more to inflate schools’ non-teaching rosters than to retain teachers.

On a per-pupil basis, federal spending on education has nearly tripled since the 1970′s. And those who have benefited the most from this profligacy aren’t the children sitting in the nation’s classrooms. No, the increase in federal education spending (and commensurate increase in Washington’s involvement in local schools) hasn’t led to improvements in academic achievement, to increased graduation rates, or even to a narrowing of the achievement gap. It hasn’t served to improve outcomes for children, but it has propped-up the public education jobs program that too often aims to meet the needs of the adults in the system, not the children it was designed to educate.

– Lindsey Burke

A Puzzling Plan to Allow Refinancing of Mortgages

One of the more puzzling parts of the President’s plan promises to allow more Americans to refinance their mortgages, but provides no details about how.  The President promises that with refinancing, families could save about $2,000 a year, but like similar past promises few homeowners are likely to see those savings.

Briefing papers released by the White House say that the economic team will “work with” Fannie Mae, Freddie Mac, the regulator that runs them since both effectively failed three years ago, and “industry leaders” to make the 2009 Housing Affordable Refinance Program (HARP) more effective.

This means that the White House still has no idea how to do this. HARP, which was supposed to help between 4 and 5 million homeowners who owe more than their property is worth, and several other attempts to help under water homeowners have all been resounding failures.

In theory, refinancing at today’s record low mortgage rates is a good idea that would reduce monthly mortgage payments for those whose mortgages are refinanced. This would especially benefit homeowners who have paid their mortgage on time, but still owe more than the house is worth. These homeowners would be more likely to stay in the house.

However, even a well planned refinancing program would still be slow and complex. And sadly, there is no sign that the Administration has figured out how to successfully structure such a program.

Mortgages are both made and refinanced one at a time. The several past efforts to do mass refinancings have foundered in a mass of overwhelmed phone lines, complex paperwork requirements, and confusion. Some housing advocates talk about redoing hundreds of mortgages at a time, but have no idea how to legally implement such a goal.

Another question that must be answered if the mortgage refinancing proposal would cost money. Briefing papers are silent on this, but a refinanced mortgage will produce lower earnings for the lender. If the mortgage value is written down to the actual value of the house (which is unknown at the moment), there would be additional costs. And most importantly, how would this proposal create jobs?

Until there are details, the President’s proposed mortgage refinancing program, like its predecessors will be little more than another unkept promise.

– David John

In 2010, the U.S. spent more on interest on the national debt than it spent on many federal departments, including Education and Veterans Affairs.

BILLIONS OF DOLLARS (2010)

Download

In One Year, Spending on Interest on the National Debt Is Greater Than Funding for Most Programs

Source: White House Office of Management and Budget.

Chart 29 of 42

In Depth

  • Policy Papers for Researchers

  • Technical Notes

    The charts in this book are based primarily on data available as of March 2011 from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). The charts using OMB data display the historical growth of the federal government to 2010 while the charts using CBO data display both historical and projected growth from as early as 1940 to 2084. Projections based on OMB data are taken from the White House Fiscal Year 2012 budget. The charts provide data on an annual basis except… Read More

  • Authors

    Emily GoffResearch Assistant
    Thomas A. Roe Institute for Economic Policy StudiesKathryn NixPolicy Analyst
    Center for Health Policy StudiesJohn FlemingSenior Data Graphics Editor

     

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