Citing a need for stricter belt-tightening, President Obama has said he wants to slash almost $2.5 billion from a program that helps low-income families pay their energy bills. The White House says lower oil prices mean funding can be reduced without leaving Americans too far in the cold. But whether that's actually the case is an open question.
The Low Income Home Energy Assistance Program, or LIHEAP, began in the 1980s as a federal program that helps eligible households pay for gasoline, oil and electricity to heat and cool their homes.
The administration has defended its proposal -- which would bring the program's current $5.1 billion budget down to pre-2008 levels -- by claiming that fuel prices simply aren't as high as they were three years ago.
But fuel prices can be volatile, and they have actually been trending upward. Last week, the Associated Press reported that gasoline prices in the U.S. "have jumped to the highest levels ever for the middle of February," while oil prices "hit $100 per barrel in January for the first time since 2008." And critics of Obama's plan say his fuel price argument ignores another factor that has record-setting numbers of Americans asking for LIHEAP help: high unemployment.
According to the National Energy Assistance Directors' Association, an organization of state officials tasked with administering the program, 8.9 million households are expected to qualify for assistance this winter, up from last winter's 8.3 million. And while electricity costs fell and natural gas prices remain "cheaper than in recent winters," heating oil and propane prices are hitting record highs. All of this, critics of the proposed cuts say, means Obama's cuts will further stretch thin a program that will leave 3 million Americans without the assistance they need.
Some LIHEAP critics think the cuts make sense, arguing that the program is poorly administered. A Government Accountability Office report (PDF) that surveyed several states found the program was indeed susceptible to fraud after discovering more than $116 million in program funds were distributed to households using "fraudulent identity information."
But Mark Wolfe, executive director of the states' National Energy Assistance Directors' Association, said while fraud against the program is certainly an issue, it's not rampant. Benefits are relatively small (usually less than $1,000) and only distributed once a year, so defrauding a program like LIHEAP isn't likely to make someone rich.
"Unlike Medicaid, where you'll see very large fraud cases, it's difficult to steal a lot of money in LIHEAP," Wolfe said. "It's not easy to walk away with a lot of cash."
Meanwhile, political commentators have speculated that some of Obama's proposals, including the LIHEAP cuts, are essentially a feint by the administration, a way for Obama to show he's serious about cutting costs while pushing a proposal it knows won't go through. Whatever the strategy, lawmakers on both sides of the aisle have already joined together to defend LIHEAP. This week, a group of more than 30 senators denounced the cuts, calling the impact of Obama's plan "devastating."
