Thursday, June 14, 2012

Yet Another Spending Hang Up - Free Phones Cost Taxpayers $2.1 Billion Per Year

A coupla billion here, a coupla billion there...soon you're talking about real money.

The Food stamps program has vastly expanded, from $35 billion in 2008 to $75 billion last year. One thing that's under the wire is that being on food stamps, Medicaid, Head Start or other public assistance makes you eligible for a free, taxpayer funded cell phone and free monthly minutes.

As this Breitbart piece reveals, the program is called Lifeline, it's growing by leaps and bounds and of course, fraud is rampant:

Lifeline was started in the mid-'80s to reduce the cost of phone service to rural and needy customers. The program's costs are covered by a tax included on every monthly phone bill called the Universal Service Charge. The program eventually grew to include discounted cell service but took off in 2009, partly because TracFone announced a new program whereby eligible individuals could get a free phone and free monthly minutes. As a result, participation in the program (and costs) skyrocketed:

Program participation was stable from 2005 to 2008, from 6.9 million to 7.1 million participants, but increased to 8.6 million in 2009. Likewise, support payments were relatively stable from 2005 to 2008, from $802 million to $823 million annually, before increasing to approximately $1 billion in 2009.
The rapid growth of the program has continued since then. In 2011, the FCC estimated the cost (page 153) of the program would be $2.1 billion and said it would reach $3.3 billion by 2014 absent major reforms. The FCC also found that part of the problem with the program was rampant fraud:

[O]ur ongoing oversight has revealed that a substantial number of subscribers are receiving duplicative Lifeline support, which includes individuals receiving two or more Lifeline benefits from ETCs as well as two or more individuals in a household receiving benefits from multiple ETCs.

Not only that, but as word gets around, even people who are paying for their cell phone service now will turn them in to take advantage of this new 'free' benefit.

The FCC recommended the creation of a national database to keep track of multiple users. That will be a non-starter in many Blue urban areas, which have iron-clad privacy rules designed to prevent various public assistance programs from cross checking their rolls - and of course, facilitates double and triple dipping by savvy 'customers'.

Not only that, but the feds have been discussing expanding the goodies by provided free broadband services with every phone. So taxpayers could soon be paying for internet features on recipient's 'free' phones if the feds have their way.

Originally, Lifeline service was designed for a limited use land line to allow elderly and needy customers to call for essential services like police, fire and ambulances. Now, it's morphed into something entirely different.

Nobody needs a cell phone. It's a luxury. The FCC already requires phone companies and cell carriers to transmit 911 calls for police, fire and emergencies free of charge,so this is not a question of depriving anyone of anything except the joy of yakking and surfing the net on someone else's dime. Not only that,but many cell phone carriers have cheap, limited use programs that can be afforded by even the average public assistance recipient.

This is an example of exactly the kind of ridiculous wasteful government program that needs to be eliminated as we return to fiscal sanity.

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