Because civilized people shouldn't let poor folks freeze to death, the U.S. has long had a program which provides heating assistance for the poor. The current LIHEAP, or the Low Income Home Energy Assistance Program, has existed since 1981. In 2009, roughly 45 million households were eligible for assistance with their heating bills thru LIHEAP, but just 1 in 6 of those households received any such assistance due to inadequate funding in what was the record funding year for the program.
For 2015, Obama's budget proposes to fund LIHEAP at about half the wholly inadequate level of 2009. Based on the GOP's history, one can expect further dramatic cuts to this program in the legislative process.
This is a proposal to enable those cuts, PROGRESSIVELY. See below the fold for more.
It's a simple concept. Instead of letting people freeze by not funding heating assistance fully, instead of throwing money away by paying for energy waste, instead of increasing fuel prices and driving up carbon emissions by subsidizing fossil fuel use year after year, there is a simple alternative.
We can assist in meeting the heating/cooling needs of all of the poor, spend less money annually, put more people to work in the near term, and reduce fuel use and carbon emissions simultaneously via one simple policy.
It currently costs the federal government, on average, less than 1% per year in real terms to borrow money. The cost of weatherizing an eligible U.S. home averages $6500. Present value of savings from weatherization average 2.2X that over the lifetime of the weatherization. The cost of weatherizing 45M homes would thus be less than $300B, the financial benefits to the poor would be about 12X LIHEAP, and the annual real interest cost would be roughly equivalent to the cost of LIHEAP. Increased economic activity created by the ~$300B direct expenditure would repay most of the cost in the current economic climate, resulting in net savings to the budget. In addition, the program would have the direct effect of reducing national energy consumption and national carbon emissions, via a program which paid for itself. Of course, in reality, it would be very difficult to weatherize all eligible households in a single year, and weatherization would need to be maintained over time.
To be fair, we already have a program which does this, called WAP, or the Weatherization Assistance Program. Unfortunately, WAP funding is at least an order of magnitude too small. On average over the past 38 years, WAP has weatherized fewer than 200k homes annually. During a 3.5 year period, as part of the Recovery Act, this roughly doubled. Instead of ramping down from those levels, we need to continue to ramp up dramatically. An appropriate rate of growth would be to roughly double the size of the program each year until reaching ~3M homes per year (about 4 doublings). At this level, the program would directly employ about 135K people at a gross capital cost of about $20B/yr, but a net annual cost of less than zero. It would take about 15 years to reach all 45M eligible participants, at which point LIHEAP would no longer be needed except for emergency situations. After 15 years, some aspects of weatherization would need to be re-done, and the program would be basically stable.