The Government Just Doesn’t Handle Money Well

Last Thursday The Washington Times posted an article about the ‘Obamaphone’ program started under President Obama. The purpose of the program was to provide low-income Americans with cell phones that they could use in case of emergency.  Unfortunately, a new report from the Government Accountability Office reveals that the program is rife with fraud.

The article reports:

The report, requested by Sen. Claire McCaskill, Missouri Democrat, also says the program has stashed some $9 billion in assets in private bank accounts rather than with the federal treasury, further increasing risks and depriving taxpayers of the full benefit of that money.

 “A complete lack of oversight is causing this program to fail the American taxpayer — everything that could go wrong is going wrong,” said Mrs. McCaskill, ranking Democrat on the Senate’s chief oversight committee and who is a former state auditor in Missouri.

“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,” she said.

The program, run by the Federal Communications Commission, predates President Obama, but it gained attention during his administration when recipients began to associate the free phone with other benefits he doled out to the poor.

The article lists some of the problems with the ‘Obamaphone’ program:

Some 10.6 million people have an Obamaphone, but 36 percent of them may not qualify, investigators said after sampling the population and finding a huge chunk of people couldn’t prove they were eligible.

More than 5,500 people were found to be enrolled for two phones, while the program was paying for nearly 6,400 phones for persons the government has listed as having died.

Investigators also submitted fraudulent applications to see what would happen, and 12 of the 19 phone carriers they applied to approved a phone.

The article concludes:

The FCC had promised to make changes, but the new report says those have fallen short.

GAO investigators questioned whether the program is even needed anymore. The price of phones and service on many plans have dropped dramatically, making them affordable for nearly everyone, the GAO says. Investigators also found that without the free government phone, many recipients would gladly pay for the services on their own anyway.

In its official response, the FCC called the GAO’s report “thoughtful” and promised to try to clean up the program. It said it’s already taken steps to improve the situation.

Milton Friedman said it best, “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.”

Obama Phones

This is the “Obama Phone” video that has gone viral on YouTube:

The Washington Examiner posted a story yesterday about the federal program behind the Obama Phones.

The article reports:

The program is called Lifeline, established in 1984, originally created to subsidize landline phone service for low income Americans, funded by government-collected telecommunication fees, paid by consumers.

In 2008, the program was expanded to support cell phones which quickly escalated the cost of the program. In 2008 the program cost $772 million, but by 2011 it cost $1.6 billion.

The article points out that many of the people receiving free cell phones had signed up for free phones from two or more carriers.

The video below (posted on YouTube), produced by Rep. Tim Griffin R-Ark, provides a common sense solution to the outrageous growth in the free phone program:

This is one of many programs that could be changed in order to reduce the federal deficit!


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