Free Cells

May 28, 2013

Why are we footing this too?

Citing rampant fraud and abuse by telephone service providers, GOP Senator from Louisiana David Vitter called on the U.S. Senate last Tuesday to end the welfare subsidy for cellular phone service in the federal Lifeline Program that cost Americans nearly $2 billion in 2012.

Created in 1984, Lifeline was designed to expand landline telephone service to low-income households through the Universal Service Fund. In 2008, however, the program was extended to wireless service providers who, according to Sen. Vitter, have used fraudulent means to increase the cost of this component of the program from $143 million in 2008 to $2 billion last year.

“I think the whole program is an entitlement mentality gone wild … There has been widespread fraud and abuse in this program and I’m convinced it is at the core of this program and can’t be scrubbed out,” charged Vitter in a recorded video of his presentation to the Senate posted on YouTube where he explained why cellular phones should be cut from Lifeline.

“The FCC is in charge of the program, it itself estimates that about 270,000 of these beneficiaries have more than one of these free government cell phones. That’s interesting, that’s important because that’s completely against the law and against the rules,” said Vitter. “The FCC also says that the top five companies that benefit from the program, couldn’t confirm the eligibility of 41 percent of the folks they signed up.”

“The cell phone welfare program has expanded far beyond its original intent, and as so many middle class Americans struggle underneath this economy, it is really offensive for Washington to make folks pay for free cell phones for others,” he added in a release.

Vitter who made the recommendation as an amendment to the Farm Bill had earlier introduced the idea as a standalone bill. He pointed out that while defenders of the program have argued that improvements are being made to increase efficiency and cut fraud, a lot more was being said than done in this regard.

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He provided evidence showing how a friend, Clarence, who did not qualify to receive a phone under Lifeline’s eligibility criteria was able to acquire a phone under the program anyhow just over a week ago.

“Now it’s paid for by you and by me, it’s paid for by our land lines and cell phone bills. We all get a charge on our bill, if you actually pay your phone bill, land line or cell phone, you get a charge and you pay that charge and that’s what funds this program,” explained Vitter.

“There are tents popping up on every other street corner handing out these free government cell phones like candy. And why is that happening? Because the people handing out the phones have a vested interest in doing that, have a vested interest in not worrying about whether eligibility criteria are met because every time they hand out a phone they get $9.25 per phone per month as long as they can sustain that gravy train,” added Vitter.

TracFone, a company owned by Mexican billionaire Carlos Slim, is the largest recipient of Lifeline funding and collected $440 million last year to subsidize service for 3.9 million low-income households, according to one report.

The report noted that the company has been running ads in Beltway publications defending the program, and registered to lobby on the program in March. It also went on the attack last week with an advertisement in the New Orleans Times-Picayune featuring an aerial picture of a flooded New Orleans under the headline: “Lifeline’s wireless benefit was born out of Katrina.”

“Senator David Vitter must have forgotten. Today, this vital benefit helps seniors, veterans and low-income families stay connected to their communities, first responders and employers,” noted the ad while warning that Vitter’s bill would “hurt a lot of families in Louisiana who struggle each day to make ends meet.”

But in his response in the Senate last week, Vitter charged right back.

“They’re the biggest welfare abusers of this. Rich owners of companies who milk the system to get richer who I would call government welfare kings. This abuse needs to stop … and my amendment would help do that,” he said.

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