Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Obama's budget would cut heat subsidies for poor

snow_blizzard.gi.top.jpg By Charles Riley, staff reporter


NEW YORK (CNNMoney) -- President Obama's 2012 budget will propose cutting $2.5 billion from a program that helps low-income people cope with high energy costs in the cold of winter and heat of summer, according to a source familiar with the budget process.

The reduction is steep, and might impact millions of families. In 2010, the program received $5.1 billion in federal funds, which were then distributed to states that have both low average incomes and high energy costs.

The administration is quick to point out that the reduction will bring the funding down to $2.57 billion, which is exactly the same as the fiscal year 2008 level.

Before becoming law, the proposal will have to survive a marathon budget process, but Republicans are also calling for cuts to the program, a fact that increases the likelihood of passage.

It's hard to say exactly how many people would be affected by the reduction in funding.

Before the White House plans, first reported by National Journal, leaked to the press, a coalition of Democrats on Capitol Hill led by Rep. Ed Markey of Massachusetts defended the program.

The program currently only serves one of every five eligible people, and a reduction would have dire consequences for those already receiving benefits, Markey said.

"Returning to 2008 funding levels ... would mean forcing 3.1 million families nationwide to return to deciding between heating and eating," Markey said.

In Massachusetts, Markey said the program will help 250,000 residents this year. The state received $175 million in 2010.

Markey's estimate of the impact of the proposed cut is in line with one produced by the American Gas Association, an industry group that represents natural gas companies. Based on data collected from state governments, the group predicts 3.2 million households, and 9 million individuals, will be affected by the administration's proposal.

States with extreme weather and high poverty levels would be hit hardest. In 2010, New York received $479 million, the largest amount of aid. Pennsylvania received $282 million, while Michigan and Illinois both got $233 million.

In all, 15 states received in excess of $100 million.

Members of Congress from those states are sure to fight the cuts. On Friday, a bipartisan group of 31 senators wrote to Obama's budget officials urging them to reconsider.

"To cut this critical funding during one of the coldest winters in recent memory would not only be devastating for the individuals who rely on LIHEAP to keep their families safe and warm, but would serve as a threat to our national economic recovery," wrote Democratic Sen. Jack Reed of Rhode Island, who was joined by Republican Sen. Olympia Snowe of Maine.  To top of page

Index Last Change % Change
Dow 17,687.78 -58.20 -0.33%
Nasdaq 5,127.82 -0.97 -0.02%
S&P 500 2,104.23 -4.40 -0.21%
Treasuries 2.20 -0.06 -2.78%
Data as of 3:34pm ET
Company Price Change % Change
Bank of America Corp... 17.95 -0.18 -0.99%
Micron Technology In... 18.72 -1.18 -5.93%
Facebook Inc 94.47 -0.74 -0.78%
Apple Inc 121.30 -1.07 -0.87%
Ford Motor Co 14.80 -0.30 -2.02%
Data as of 3:19pm ET
Sponsors

Sections

Some families are outraged at the sums they've been offered by Lufthansa as compensation for the Germanwings plane crash in March which killed 150 people. More

Fast-food chains that operate in more than 30 locations nationwide are the sole target of a new rule in New York to hike their minimum wage to $15. But consumers and small business owners, as well as some employees, may be the ones to pay the price. More

You can't blame it on the economy anymore. More Millennials now have jobs, but are still living at home. More