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Updated at 8:06 a.m. on February 10.
President Obama’s proposed 2012 budget will cut several billion dollars from the government’s energy assistance fund for poor people, officials briefed on the subject told National Journal.
(Analysis: Who Wants Grandma to Freeze?)
It's the biggest domestic spending cut disclosed so far, and one that will likely generate the most heat from the president's traditional political allies. Such complaints might satisfy the White House, which has a vested interest in convincing Americans that it is serious about budget discipline.
One White House friend, Sen. Chuck Schumer, D-N.Y., said earlier today that a Republican proposal to cut home heating oil counted as an "extreme idea" that would "set the country backwards." Schumer has not yet reacted to Obama's proposed cut. Sen. Jeanne Shaheen, D-N.H., declared: “The President’s reported proposal to drastically slash LIHEAP funds by more than half would have a severe impact on many of New Hampshire’s most vulnerable citizens and I strongly oppose it." A spokesman for Rep. Edward Markey, D-Mass., declared similarly: “If these cuts are real, it would be a very disappointing development for millions of families still struggling through a harsh winter.”
In a letter to Obama, Sen. John Kerry, D-Mass., wrote, "We simply cannot afford to cut LIHEAP funding during one of the most brutal winters in history. Families across Massachusetts, and the country, depend on these monies to heat their homes and survive the season."
The Low Income Home Energy Assistance Program, or LIHEAP, would see funding drop by about $2.5 billion from an authorized 2009 total of $5.1 billion. The proposed cut will not touch the program's emergency reserve fund, about $590 million, which can be used during particularly harsh cold snaps or extended heat spells, three officials told National Journal.
In 2010, Obama signed into law an omnibus budget resolution that released a total of about $5 billion in LIHEAP grants for 2011. Pointing to the increasing number of Americans who made use of the grants last year, advocates say that LIHEAP is already underfunded. The American Gas Association predicts that 3 million Americans eligible for the program won't be able to receive it unless LIHEAP funding stays at its current level.
How many people, if any, might actually lose the assistance is difficult to determine. Officials were quick to point out that LIHEAP spending has grown significantly over the past several years as the government tried to keep up with rising gas prices. In 2008, the government spent $2.6 billion on LIHEAP. In 2009, the figure jumped to $8.1 billion. So the cut from that high level restores LIHEAP to something close to where it was before Obama took office. Other circumstances, such as the weather and fuel prices, could affect the distribution of benefits.
"In real terms, under our budget, LIHEAP funding will be at levels similar to the Clinton administration," a senior administration official said.
Still, despite the uncertainties surrounding the proposed cut, it is dramatic. LIHEAP has been semi-sacred for most Democrats and many Republicans -- a program that carries an emotional resonance as it was designed to keep poor people, particularly older poor people, cool in the summer and warm in the winter. “A lot of people in the Northeast are going to be unhappy,” an administration official briefed on the budget said. That's one reason why Republican senators like Scott Brown of Massachusetts plus Olympia Snowe and Susan Collins of Maine would probably join Democratic efforts to keep funding levels higher.
Critics say that the program is poorly administered and that, contrary to intentions, it’s become a subsidy for energy companies, most of whom are prohibited by law from turning off services to delinquent bill-payers during weather emergencies. About 10 percent of LIHEAP funds are transferred to “weatherization” programs, according to a government study.
Obama tapped the LIHEAP discretionary fund in January during a record-shattering cold snap in the Northeast.
News of the cut comes on the very day that the National Fuel Funds Network, a coalition of energy groups and community advocates, holds its “Washington Action Day” on Capitol Hill to call on Congress to increase funding by at least $1 billion.
The president’s budget is due next Monday, and the administration has been bracing traditional Democratic allies for cuts to favorite programs. The White House understands that Americans are skeptical of Obama’s willingness to tackle the estimated $1.5 trillion budget deficit and believes that he must cross a threshold of seriousness in their minds.
Republicans on Wednesday unveiled a partial list of items they’d cut from the resolution that funds the current budget year. Obama won’t cut nearly as much.
Beyond the LIHEAP cut, many of Obama's proposed cuts will come from federal programs where new incentives and increased competition could provide the service more cheaply, or where a lack of oversight has created waste and inefficiency, the officials said.
Since Obama’s State of the Union speech, the White House has been eager to show it’s serious about deficit reduction. It has begun to outline the cuts that would offset more spending for education, infrastructure, and research. These cuts include a $300 million reduction in community development block grants, $350 million for programs that support “grassroots” community groups, and $125 million from the Great Lakes Restoration Initiative. Collectively, those three reductions will barely make a dent in the budget, which is projected to run a deficit of at least $1.5 trillion this year.
Obama has said that his proposed five-year freeze on domestic discretionary spending will save the government $400 billion.
Officials were quick to stress that while LIHEAP was being trimmed, many other Department of Health and Human Services programs, particularly those funding early childhood education initiatives, will see their funding rise.
Administration officials said that government departments and agencies were asked last summer to identify ways to reduce to their top-line budget by 5 percent.
Those proposals were forwarded to the Office of Management and Budget and the White House in the fall, and Obama and his team have spent the past two months targeting the least efficient programs. The OMB was particularly interested in programs that distribute money to secondary groups but lack mechanisms to evaluate how it is spent, officials said.