Reply #131: And cutting to piece's conclusion, with some disturbing projections

[chill_wind]

on the poverty numbers. With or without the cuts, this is some worrisome picture...

The Number of Households in Need Is Much Higher than in 2008

The Administration’s proposed cut also fails to account for the rise in poverty since 2008. In 2009, as the recession took hold, the number of poor persons rose by 3.7 million or 9 percent, by official estimates. The annual unemployment rate leapt from 5.8 percent in 2008 to 9.3 percent in 2009.


By 2012, moreover, the population in poverty is likely to have grown even more. According to CBO, unemployment is projected to be 8.4 percent in 2012, still well above its 2008 level. Poverty tends to rise following increases in the unemployment rate and does not start to decline until after the unemployment rate has started to fall. From 2008 to 2009, when the unemployment rate rose 3.5 percentage points, the official poverty rate rose 1.1 percentage points. If not for the poverty-cushioning impact of unemployment benefits — which increased rapidly in 2009, due in large part to temporary emergency unemployment programs enacted by Congress — the increase in the poverty rate would have been even larger, about 1.9 percentage points.

If this relation between poverty rates and unemployment continues and the U.S. population continues to grow at nearly 1 percent annually, the number of Americans in poverty will be roughly 15 percent higher in 2012 than it was in 2008. Some estimates are even higher: a September 2010 Brookings analysis projected that the poverty rate could reach 15.3 percent in 2012, putting the number of poor Americans 20 percent higher than in 2008.

With home energy prices during the winter heating season as high as they were in 2008 and a population in need that is 15-20 percent higher, the President’s proposed LIHEAP funding level would serve a much lower percentage of households than were served prior to 2009.

Conclusion

If the Administration’s goal in cutting LIHEAP funding back to the 2008 level is to restore “normal” funding levels to a program that received a large increase in 2009-11, it has missed the mark. Home energy prices in the fiscal year 2012 winter heating season are expected to be about the same as they were in the fiscal year 2008 winter heating season — not noticeably lower, as the Administration’s rationale for the cut implies. In addition, the population in need of energy assistance will be considerably larger in 2012 than it was in 2008. For all these reasons, establishing the 2008 funding level as the baseline for LIHEAP in 2012 will leave a higher percentage of the eligible population unserved or underserved than in 2008 or prior years.