Obamaphone: Another failed entitlement program taxpayers pay for

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WASHINGTON, July 6, 2017 — The Government Accountability Office (GAO) has reported that the so-called “Obamaphone” program designed to provide low-income Americans phone and internet service is fraught with waste, fraud and abuse.

A product of the Reagan administration, the Lifeline phone program was initially meant to provide poor people with a phone in case of an emergency or, as time went on, to apply for a job.

Administered by the Federal Communications Commission (FCC), Lifeline requires telecommunication companies like At&t, Verizon and Sprint to pay a percentage of their voice service revenues into a pool called the Universal Service Fund that is administered by an independent nonprofit company, the Universal Service Administrative Company.

Telecom companies pass on the cost of their payments to consumers, whose monthly bill includes a “universal service fee” charge. If you have a cell phone, you are paying that fee. In Maryland, the fee on a recently reviewed AT&T bill is $5.00, which comes to a $60.00 annual tax.


The controversial Lifeline Program investigation, requested by Senator Claire McCaskill, D-Mo., finds that some 10.6 million Americans have a program phone and more than 3.8 million—36 percent of them—may not be eligible. GAO investigators found that the government had been paying for nearly 6,400 phones for people who are listed as deceased; another 5,500 people were enrolled for two phones.

“A complete lack of oversight is causing this program to fail the American taxpayer—everything that could go wrong is going wrong,” McCaskill said in a statement. “We’re currently letting phone companies cash a government check every month with little more than the honor system to hold them accountable, and that simply can’t continue.”

The three-year GAO investigation found that the program has put away more than $9 billion, as of September 2016, in a private bank account. That money should be returned to taxpayers.

A spokesman for FCC Chairman Ajit Pai, who had already put the dubious program under review, said the “GAO report confirms that waste, fraud, and abuse are all too prevalent in the program.”

“Chairman Pai looks forward to working with his colleagues to crack down on the unscrupulous providers that abuse the program because every dollar that is spent on subsidizing somebody who doesn’t need the help by definition does not go to someone who does.”

Pai said in an April interview on Fox Business Network’s Varney & Company that he was told to keep quiet about potential fraud in the Lifeline program.

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