Human Events Blog

A billion dollars in Obamaphone fraud?

Remember the “Obamaphone Lady?”  Sure you do!  She was, in many ways, the exemplar of the 2012 presidential campaign: an angry welfare dependent outraged that anyone would dare to run against President Obama and threaten her benefits.  The benefit she most prominently mentioned during her tirade at a Romney campaign event was her “Obama phone,” a free government-provided cell phone.

As it turns out, she was wrong about Barack Obama as the source of this particular Big Government lollipop, but taxpaying Americans were astounded to discover that the government does indeed distribute free cell phones to Food Stamp Nation, under the aegis of a program originally instituted in the 1980s to help the poor obtain land-line telephones.  Although the benefit expanded to include cell phones (even smart phones!) under the Bush Administration, popular urban legends attribute the phones to Santa Obama.  These legends seem plausible to readers because the size of the “Lifeline” program, like every other aspect of Food Stamp Nation, has exploded under President Obama.  It cost $819 million in 2008, but weighed in at roughly $2.2 billion last year.  If you’re a taxpayer with a cell phone, you’re kicking in about $2.50 per month on your cell-phone bill to fund the program.

And, like every other government handout programs, Lifeline is absolutely riddled with fraud.  No sooner had the Obamaphone Lady burst onto the scene than stories of scam artists making off with two, three, or even more “free cell phones” began circulating.

The Wall Street Journal reports that the Federal Communications Commission noticed that Lifeline seemed to be getting out of hand, and decided to “tighten the rules” last year.  In other words, they actually started checking to make sure the proud owners of these welfare phones actually qualified for the program.  Until now, much of the program’s integrity depended on “self-certification,” which is exactly what it sounds like.  Better still, “subscribers didn’t have to re-certify once they were enrolled in the program, and there were few checks on whether households signed up for more than one cellphone.”  And membership in almost any other Food Stamp Nation program, at either federal or state levels, was a ticket into the cell-phone program, creating a titanic base of potential “subscribers.”

The FCC thought it might be able to cut costs by about 15 percent, by weeding out the fraudsters.  But the phone companies providing Lifeline services reported that “41 percent of their more than six million subscribers either couldn’t demonstrate their eligibility or didn’t respond to requests for certification.”  And that’s something of a thumbnail estimate, because the two largest subsidized phone providers, TracFone Wireless and Nexus Communications, asked the FCC to keep their results confidential.  The Journal notes that serving as a top provider for the Lifeline program has made TracFone the fifth-largest wireless carrier in the United States.

Forty-one percent.  If that percentage holds up across the TracFone and Nexus subscriber bases, we’re talking about nearly a billion dollars in ObamaPhone fraud.  The FCC thinks its tougher new eligibility requirements – which any sane manager would have put into effect on Day One, assuming this insane giveaway program should exist at all – will save $2 billion over the next three years.  They’re also trying to crack down on corporate fraud related to the program.

“The program rules we inherited were designed for the age of the rotary phone and failed to protect the program from abuse,” said FCC chairman Julius Genachowski.  Gee, ya think?  Guess you guys never saw this newfangled “cell phone” technology coming!  It only took this brain-dead bureaucracy four decades to figure out the rotary-phone era was over.  But let’s put them in charge of health care!

And while we’re on the subject, at what point in that bygone rotary-phone error did anyone with a lick of common sense think a “self-certified” welfare program with lifetime no-questions-asked membership was a good plan?  Follow-up question: what happened to the original idea of putting land-line phones in the homes of the poor?  That should be good enough to give them access to the communications technology they need to search for jobs, or call for emergency assistance.  Ah, but you see, it’s not fair to “stigmatize” them in a world where everyone else has a phone in his pocket.  And the task of wiring homes for land lines is relatively finite – the project would near completion and spending would diminish.  That simply won’t do in this age of ever-expanding Big Government!  Much better to have a completely open-ended program that will spend money forever, on the perpetual quest to slip the latest cell phone tech into every beneficiary pocket.

The idea that any provider would be allowed to keep their results confidential, or that any Obamaphone subscriber would be allowed to take a pass on responding to the eligibility survey, is absolutely absurd.  I can’t think of a more profound gesture of contempt toward the taxpayers who fund this garbage.  The notion that hard-working Americans would be asked to surrender another dime in higher taxes to fund programs sick with fraud and abuse, programs that have brought us the lunacy of welfare dependents chatting away on “free” cell phones, is offensive.

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