Crude oil prices recently passed the $30 mark for the first time since the eve of the 1991 Persian Gulf War, nearly doubling the cost of heating oil. The surge in oil prices has hit consumers hard, particularly low-income individuals. The Low Income Home Energy Assistance Program (LIHEAP) was designed to provide states with funds to help low-income residents pay their energy bills. The program also pays for their cooling costs during the summer.

LIHEAP is a block grant program administered by the Department of Health and Human Services. In his fiscal year 2001 budget, President Clinton proposed funding LIHEAP at $1.1 billion, the same level as FY2000 and FY99. Although the program historically has enjoyed bipartisan support, it was almost defunded in FY99 when the House Appropriations Committee voted it down, citing the need to spend the money on other programs. The Senate Appropriations Committee funded the program that year and when differences between the House and Senate bills were worked out, LIHEAP was restored to $1.1 billion.

On One Hand...

LIHEAP literally saves poor Americans in colder regions of the U.S. from freezing to death. Low-income families should not be faced with choosing between "eating and heating." Energy costs often rise considerably during the winter, endangering those living at or near the poverty level, which makes this program indispensable.

LIHEAP is an effectively administered poverty assistance program composed of a partnership between the federal government, states and the private sector.

On the Other Hand...

LIHEAP is an antiquated program that can no longer be justified as responding to a legitimate need. Two decades ago, the program was created to assist low-income families and seniors who were faced with massive increases in energy costs. But LIHEAP cannot be justified today, since fuel prices are relatively low and have risen at a slower rate than overall inflation over the past 20 years.

The $1.1 billion proposed for LIHEAP funding would address the needs of today's poor more effectively if the money were spent on other programs like medical research and preventive health programs.

• Only 19 percent of households who are eligible receive LIHEAP assistance.

• Households with incomes below 150 percent of the poverty level, below 60 percent of the state median income, or those that have at least one member who receives Temporary Assistance to Needy Families, food stamps, Supplemental Security Income, or certain veterans' benefits, qualify for LIHEAP grants.

• The total number of households that receive LIHEAP has declined from 6.0 million in 1994 to 5.5 million in 1995 to 4.3 million in 1996, as states have had to restrict eligibility to the neediest of the needy.

• New York, Pennsylvania and Illinois receive the lion's share of LIHEAP funds--nearly 25 percent of all LIHEAP dollars go to these three states.

• States can use up to 15 percent of LIHEAP funds for low-cost residential weatherizing.

• Many households receiving heating assistance contain either elderly residents or children.

Department of Health and Human Services, Cato Institute, Campaign to Keep America Warm