Cui Bono: To whom is it a benefit?

A principle that probable responsibility for an act or event lies with one having something to gain.

One of the most interesting things about this economy is the raft of seemingly contradictory data and information. Over the last couple of days I’ve seen a lot of tweets and blog posts about this Bloomberg article:

A ‘Tsunami of Shutoffs’: 20 Million US Homes Are Behind on Energy Bills

Surging electricity prices spur worst-ever crisis in late utility payments.

It certainly sounds ominous and all the bearish pundits, advisors and assorted political commentators have cited it as evidence that the economy is on the verge of something truly awful, a recession that will rival the 2008 financial crisis.

Just a little further down the page on Bloomberg we find this article:

Good Luck Finding a Seat in That Fancy Airport Lounge

In the post-Covid travel rebound, business-class travelers are finding their lounges are packed—mostly because of credit card perks.

The sub-headline is actually a little misleading. These lounges aren’t crowded “mostly because of credit card perks”. They’re crowded because the demand for travel, both business and leisure, is high and rising. Business travel is still only about half way back to pre-COVID levels but the big travel package operators say demand is well above 2019 levels. And that despite prices that are roughly a quarter higher.

How do we reconcile these seemingly divergent reports? Well, first of all, we need to keep in mind the title of this post, cui bono, who benefits from these articles appearing now?

Who benefits from an article about people falling behind on their utility bills? Well, first of all, the utility companies themselves. While they are allowed to add a fee to paying customers bills to cover their bad debts, they’d prefer someone else foot the bill so as not to tick off their good customers. And who might that be? How about the National Energy Assistance Directors Association cited in the article? Who are they?

The National Energy Assistance Directors Association (NEADA) is the primary educational and policy organization for state directors of the Low Income Home Energy Assistance Program (LIHEAP) and the Low Income Household Water Assistance Program (LIHWAP), federal programs that help low-income families pay their heating and cooling bills, and water and wastewater bills, respectively.

In other words the job of this organization is to keep this issue in the public eye so they can ensure they keep getting funded. That doesn’t mean the need isn’t real and I’m sure it has gotten worse recently due to the spike in natural gas prices. But the article makes this seem as if it is a new problem, one caused by COVID. That will make getting funding easier. This isn’t the first time this has been raised as a COVID issue:

Electric and gas utilities had arrearages of $32 billion at the end of 2020, with as many as 20% of households behind on utility payments.  October 6, 2021, Utility Dive

Now, many families are facing potential power shutoffs if they cannot pay their overdue home energy bills. In fact, more than 20 million families are currently behind on their utility bills, owing about $23 billion, up from about $10.5 billion at the end of 2019. The White House, Congress and the states must work together to quickly address this looming crisis.  April 28, 2022, CNN

Up to 37 million customers — representing nearly one-third of all households — will soon have to reckon with their overdue power bills at a time when many of them are struggling with lost jobs or income. Combined with other government financing allotted for energy aid since the pandemic began, the total available to help struggling households pay utility bills is about $9.1 billion. But all that assistance represents just a fraction of the $27 billion in past-due balances of U.S. households, according to the National Energy Assistance Directors Assn., which helps low-income consumers.  March 23, 2021 LA Times

You might notice that the dollar amounts vary in the articles despite the fact that NEADA provides the numbers in at least two of the articles. They also provide the data for a chart in the Bloomberg article I cited which shows the current arrearage is $16 billion and it was $8.0 billion in 2019 as opposed to the $10.5 billion figure cited in the CNN article. Apparently the amount due at the end of 2019 is variable depending on who you talk to over there.

But is this really a COVID issue? Maybe not:

31 Percent Of U.S. Households Have Trouble Paying Energy Bills, NPR September 19, 2018

One in three U.S. households faced challenges in paying energy bills in 2015, US Energy Information Agency

The demand for LIHEAP assistance remains at record high levels. In FY 2010, the program is expected to help a record 9 million low-income households afford their energy bills, a 15% increase from the prior fiscal year.  House Committee on Appropriations Subcommittee on Labor, Health & Human Services, Education, and Related Agencies, April 2010

I have no doubt that there are households in this country who are having trouble paying their bills, energy included. That is always true and troubling. But what this program proves more than anything is that if you make a pot of cash available to people who can’t pay their utility bills you will find more and more people who can’t pay their utility bills. Yes, I’m saying that the rise in demand since the program started is at least partially due to people gaming the system.

The reason the other article appeared now is easier to figure out.

At a time when many full-service carriers are counting on premium and business travelers to buoy profits, perks that disappoint can risk alienating these prime customers.

Airlines and others who operate these lounges are trying to keep down demand by discouraging travelers from even trying to get in. If they know in advance the place will be crowded and the service lousy they might just decide to wait for the flight somewhere else.

Are there people in the US that can’t afford their utility bills today? Yes, no doubt. Is it a crisis? Not likely. Does it mean the US economy is in recession right now? Not a chance.

Media today is not based on some reporter getting out and finding a story. Most of it is little more than journalism by press release – or well placed article. You always have to consider the source, who benefits. Cui bono.

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