‘Obama phones’ subsidy program draws new scrutiny on the Hill

When someone in the Washington area begins to type the president’s last name into the search box of Google’s home page, the top three terms it suggests as the most popular selections are Obama, Obamacare and . . . Obama phone.

Obama phone? A hotline, maybe, to the Oval Office?

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Hardly. “Obama phone” is the widely used — and misleading — nickname of a 28-year-old federal program known as Lifeline. It provides discounts, averaging $9.25 a month, on phone service for 13.3 million low-income subscribers.

In the 31 / 2 years after false rumors started that the Obama administration was giving free cellphones to poor people — and six months after a racially charged video about it went viral — a once-obscure phone service subsidy is getting renewed scrutiny on Capitol Hill.

There are growing calls in Congress to end or drastically cut back Lifeline; later this month, the House Energy and Commerce Committee will hold a hearing that could help determine its fate.

“The program has nearly tripled in size from $800 million in 2009 to $2.2 billion per year in 2012,” the senior Republicans on the Energy and Commerce Committee wrote in a March 26 letter to the Democratic minority. “American taxpayers — and we as their elected representatives — need to know how much of this growth is because of waste, fraud and abuse.”

Lifeline was begun not by President Obama but under Ronald Reagan. It expanded to include cellphone service during the presidency of another Republican, George W. Bush.

In Obama’s first term, amid evidence of widespread fraud, the Federal Communications Commission moved to crack down on the program, saving what it predicts will be $400 million this year, on top of $214 million in 2012.

Never mind all that. “Obama phone” has stuck.

Republicans employ it as shorthand for the excesses of a welfare state. So prevalent is the catchphrase that some telecommunications companies even market the discounted service as an “Obama phone” — and often add a free phone for those who sign up.

Lifeline’s intent was inarguable enough: Phone service is “crucial to full participation in our society and economy,” the FCC noted in the order creating Lifeline on Jan. 8, 1985.

Expanding Lifeline to cellphone service reflected not only technology but also the reality of how poor people live. Last year, the Centers for Disease Control and Prevention found that slightly more than half of adults in poverty lived in households that had only wireless phone service.

But in the view of many conservatives, the “Obama phone” has become Exhibit A in the case against a liberal president who they believe is doling out goodies to make people more dependent on government. It is a version of the infamous “47 percent” argument that GOP presidential candidate Mitt Romney made last year, when he claimed at a surreptiously videotaped fundraiser that nearly half the population supports Obama because it wants government handouts.

Lifeline made its way onto the radar screens of the right with an anonymous e-mail, which began circulating in 2009. It warned that free “Obama phones” were being given to welfare recipients, along with 70 minutes of service a month. “The very foundations that this country was built on are being shaken,” the e-mailer wrote.

From there, the conspiracy theories sprouted. Conservative talk radio last year was abuzz with speculation that “Obama phones” had become a means for the president’s tech-savvy reelection campaign to get poor people and minorities to vote.

Some of it was fueled by a video of an Obama supporter that went viral about six weeks before the election and has been viewed almost 8 million times.

“Everybody in Cleveland, low minority got Obama phone,” a woman yells on the video. “Keep Obama in president, you know? He gave us a phone.”

That narrative has lived on for some Obama critics as an allegory that explains the president’s worldview. “The president offers you free stuff, but his policies keep you poor,” Sen. Rand Paul (R-Ky.) said in the tea party response to Obama’s State of the Union address. “For those who are struggling, we want to you to have something infinitely more valuable than a free phone.”

And it has become woven into the current fiscal arguments. House Speaker John A. Boehner (R-Ohio) tweeted on Feb. 19: “Nobody should be talking about tax hikes when govt is spending taxpayer dollars on free cell phones.”

Lifeline, however, is not funded by taxes; it subsists on fees that are tacked on to most phone bills. That fund subsidizes a number of programs, which in addition to Lifeline include telecommunications service to rural and remote areas and to schools and libraries.

Some see a racial dimension to the opposition. “The syllogism is we all know — wink, wink — who is undeserving and who are the takers,” said David Honig, co-founder of the Minority Media and Telecom Council, which promotes access to technology for the disadvantaged. “The president looks like them, and he gives things away to them.”

The more substantive problem that has plagued Lifeline has little to do with either side’s political philosophy. When it was expanded to cover cellphone service in 2008, regulators included few safeguards against fraud.

As a result, there have been widespread reports that cellular providers, eager to collect a subsidy for each low-income subscriber, signed people up without verifying their eligibility. Some recipients also snapped up multiple phones in violation of a one-per-household rule.

Republicans are not the only ones complaining.

After Sen. Claire McCaskill (D-Mo.) received a solicitation for a free phone in the mail at her home in 2011, she joined the chorus of critics. As the Senate deliberated on its budget in late March, McCaskill was the only Democrat to join Republicans in voting for a nonbinding amendment by Sen. David Vitter (R-La.) that called for ending the “mobile phone welfare program.”

The FCC implemented a set of regulations last year that required detailed audits every two years of companies that receive more than $5 million from Lifeline and imposed new requirements on subscribers to prove their eligibility and recertify it each year.

The agency has also reviewed 12.5 million subscriber records, eliminating what it says were 1.1 million duplicate subscriptions. And it is developing a national database of Lifeline subscribers to prevent fraud.

That, however, does not satisfy lawmakers such as Rep. Tim Griffin (R-Ark.), who has written a House bill to restrict the program to land lines.

Beyond the potential for waste and fraud, Griffin said, the program raises other questions.

“Should the federal government be giving people cellphones?” he said. “What about iPads? Where do we draw the line on this stuff?”

Alice R. Crites contributed to this report.

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