Obama Phones: Poster Child For Government Waste

Millions of Americans are receiving free cell phones, free minutes and free texts, courtesy of taxpayers. It's easy to qualify for the government freebie.  And best of all, this is a life time deal.  All you need to do is re-qualify once a year to keep your free stuff.

The official government name of the program is Budget Mobile Lifeline Service.  However, users and the community at large know it by another moniker: the Obama Phone. It acquired this sobriquet after a viral video spread the word that the Obama administration was handing out free phones to the poor.

The program, riddled with waste, fraud and abuse, has drawn new scrutiny on Capitol Hill.  According to the most recent Congressional figures, the cost of providing those free phones was a staggering $2.2 billion in 2012.  One report claimed there were 12.5 million subscribers to the programs.

A Government Accountability Office (GAO) report in 2010 pegged the expenses at $802 million for the years 2005-2008.  The costs skyrocketed to $1 billion in 2009.  The number of participants had grown to 8.6 million in 2009, the GAO investigation found.

However,  statistics are hard to verify because the agency in charge of the scheme, the Federal Communications Commission, has been guilty of shoddy record-keeping.  In fact, the FCC only began to compile a subscriber database late last year.  So far, no statistics have been released.

Meanwhile, the program costs have spiraled out of control.  Just since President Obama took office, expenditures have nearly tripled from $800 million to more than $2 billion.  Obama Phones are the perfect example of how government programs start small and mushroom out of control.

Under President Reagan, the federal government decided to provide a subsidy for so-called Lifeline telephone service to the poor in 1985.  It was designed to give low income individuals the opportunity to call 911, an ambulance or for other emergency use.  It applied only to landline telephones.

To pay for the program, the federal government tacked on fees to the phone bills of most customers.  Although it is called a fee, wireline subscribers are being forced to pay what amounts to a tax for the privilege of having a telephone.

The program was expanded under President George W. Bush to include cell phone service.  The rationale was that most poor people had disconnected their landline phones and opted for wireless devices. The problem is the original intent was lost in the expansion.

Now low income people get a free cell phone, 250 free minutes of usage and 250 free texts each month.  Everyone who receives almost any type of government assistance qualifies.  That includes people who get food stamps, energy assistance, Medicaid or housing assistance, to name just a few.

Once an individual qualifies, the service is provided for 12 months. After that, recipients can re-qualify every year.  The government will even contact the user to make it easy to renew the free service annually.  However, the program is replete with fraud because of slipshod administration.

This year the Justice Department charged three men with defrauding the program of $32 million after an investigation uncovered their scheme to bilk the government to finance a well-heeled lifestyle.  It was unclear how the trio was able to pull off the elaborate con.

Last year the FCC filed two separate actions against eight firms who swindled the Obama Phone program of a total of $47.4 million.  The companies were accused of such chicanery as receiving duplicate payments for consumers who already had the free cell service from their firm.

Meanwhile, the promotion of the program continues unabated. Google "Obama Phone" and up pops a smiling picture of the president talking on a landline phone.  Underneath, the caption screams: "Get Your Free Obama Phone."

Scores of firms are peddling the phones because they collect a bounty from the government.  The FCC pays $10 to the companies for every new subscriber.  There is no incentive for these companies to verify eligibility and the FCC has failed to do an adequate job of policing the program.

Republicans have introduced legislation to pull the plug on the cell phone program.  Of course, Senate Majority leader Harry Reid will never allow a vote on such a bill.  That means the scam will continue unchecked costing Americans billions of dollars.  Only in Washington is this deemed acceptable.