A new economic plan aimed at rescuing middle-class citizens hit by the financial crisis which was unveiled Monday by Democratic presidential candidate Barack Obama includes provisions to supplement existing funding to help needy customers in cold weather states pay their energy bills during the upcoming heating season.

The wide-ranging plan focuses on help for U.S. taxpayers who are facing mortgage foreclosures, increased unemployment and higher energy prices this winter.

“Our country faces its most serious economic crisis since the great depression. We have lost 760,000 jobs this year and some leading forecasters project that the unemployment rate will exceed 8% by the end of 2009. Working facilities, who saw their incomes decline by $2.000 in the economic ‘expansion’ from 2000 to 2007, now face even deeper income losses,” Obama said during an economic policy address in Toledo, OH.

As part of his $25 billion state fiscal relief package, Obama proposes to supplement existing funding for the Low Income Home Energy Assistance Program (LIHEAP) for those who can’t meet their heating bills. He did not say what part of that $25 billion would be set aside for LIHEAP.

Obama’s proposed supplemental funding would be in addition to the record $5.1 billion for LIHEAP that Congress recently approved, which will allow states to increase the number of families served by the program to 7.8 million from 5.8 million (see Daily GPI, Oct. 7).

Obama’s pledge of greater LIHEAP funding comes as the Energy Information Administration (EIA) predicts that average household heating expenditures for the upcoming winter season will likely be 15% more than last winter, increasing from an estimated $986 spent a year ago to a projected $1,137 (see Daily GPI, Oct. 8).

Households heated primarily with heating oil, which account for only 7% of U.S. households, can expect to see the biggest jump in winter heating costs, paying an average of $449 more (23% hike). Natural gas-heated households, which make up more than 50% of the households in the nation, will likely pay an average of $155 more this winter (18% higher), the EIA said.

The agency anticipates that the 35% of households that rely on electricity are likely to fork over an average of $89 (10%) more this winter, while propane-heated houses are projected to pay an average of $188 (11%) more during the 2008-2009 heating season, which runs from Nov. 1 through the end of March.

Obama’s rescue package also calls for the creation of five million high-wage jobs by investing in renewable sources of energy to eliminate U.S. dependency on Middle East oil.

A key plank of Obama’s energy agenda is to enact a windfall profits tax on major producers, which would then be reinvested to reduce the burden of energy prices. However, with oil and natural gas prices falling fast, the amount of money derived from such a tax will likely be far less than what Obama and his camp initially estimated.

In announcing his economic plan the Democratic presidential candidate noted that “retirement savings accounts have lost $2 trillion [in value]. Markets have fallen 40% in less than a year. Millions of homeowners who played by the rules can’t meet their mortgage payments and face foreclose as the value of their homes have plummeted. With credit markets nearly frozen, businesses, large and small, cannot access the credit they need to meet payroll and create jobs.”

Obama’s rescue plan would provide a new temporary tax credit to companies that add jobs in the United States; eliminate all capital gain taxes on investment in small and start-up companies; extend unemployment benefits for 13 additional weeks and temporarily suspend taxes on them; allow for penalty-free hardship withdrawals from individual retirement accounts and 401 (k)s this year and next; impose a 90-day moratorium on foreclosures for homeowners acting in good faith; and provide $25 billion in state fiscal relief to help avoid increases in property taxes.

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