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Obama budget has $2.5 billion cut in heat aid for poor

WASHINGTON (Reuters) - President Barack Obama will propose cutting $2.5 billion from a program that provides heating assistance to poor people in his fiscal 2012 budget, a source familiar with the budget process said on Wednesday.

The move is likely to upset his political base of left-leaning Democrats while proving his commitment to cut spending to Republicans, who are pressing for major cuts to help reduce the U.S. deficit.

The budget will propose to allocate $2.57 billion for the Low Income Home Energy Assistance Program, commonly known as LIHEAP, down from an allocated $5.1 billion for fiscal 2010.

The source noted that the $2.57 billion figure was equal to the funding in fiscal 2008.

"Energy prices are now well below their levels in spring 2008 when Congress decided to increase LIHEAP funding to $5.1 billion," the source said.

(Reporting by Jeff Mason; Editing by Paul Simao)