At first glance, President Obama’s motion to kill a program that provides low-income families with energy sounds as politically attractive as legislation to drown puppies, but when you take a look at the Low-Income Home Energy Assistance Program (LIHEAP), it makes all the sense in the world.
LIHEAP has become a rapidly expanding federal program meant to help America’s households with the lowest incomes pay their fuel bills. The funding for LIHEAP more than doubled in the past few years, increasing from about $2 billion in 2008 to $5.1 billion this fiscal year. President Obama’s fiscal year 2012 budget request cuts LIHEAP to $2.6 billion. Despite the noble intentions behind LIHEAP, it is a program beset by fraud and waste, and it fails to address the real issue of reducing high energy prices by increasing energy supplies.
Nobody wants the heat shut off on low-income households in the middle of winter, which is why state laws prohibit utilities from doing so, making LIHEAP duplicative. In reality, that money just goes to utilities that would not have collected the money. In many cases the money is lost to fraud and abuse. A June 2010 Government Accountability Office report on LIHEAP found that:
• The Department of Health and Human Services sent $3.9 million to 11,000 deceased people to pay heating and cooling costs out of the LIHEAP.
• The state of Illinois “provided $840 in energy assistance to a U.S. Postal Service employee who fraudulently reported zero income to qualify for LIHEAP. Despite earning about $80,000 per year, the employee stated that she saw ‘long lines’ of individuals applying for LIHEAP benefits and wanted the ‘free money.’”
• Claims processors did not practice due diligence. The report states, “Posing as low-income residents, landlords, and an energy company, GAO used bogus addresses and fabricated energy bills, pay stubs, and other documents to apply for energy assistance. All fraudulent claims were processed and the energy assistance payments were issued to our bogus landlords and company.”
President Obama defended the cuts by saying that, because energy prices are lower than they were in 2008, the funding does not need to be nearly as high. He went on to say, “If it turns out that, once again, you see a huge energy spike, then we can revisit it, but let’s not just assume because it’s at a $5 billion level that each year we’re going to sustain it at a $5 billion level regardless of what’s happening on the energy front.”
Instead of worrying about how to use taxpayer dollars to help Americans with high energy prices, the Administration and Congress should focus on a policy that makes energy affordable in the United States. Increasing access to our own energy reserves onshore and offshore and allowing access to easy imports from Canada would be a more prudent solution. President Obama should be applauded for his budget cut to LIHEAP. It is a step in the right direction; however, without the proper reforms to the energy market, it will do nothing to help Americans cope with higher energy prices.