Lawmakers get serious about cutting off ‘Obama phone’ cash cow

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With Republican efforts to cut off “Obama phones” gaining steam, the company that gets the lion’s share of the federal subsidy that pays for them is looking for a lifeline for its own.

The program formally known as Lifeline earned its “Obama phone” nickname — and national notoriety — last year when a video of a woman protesting outside a Mitt Romney campaign event went viral. (See below.)

obamaphone“Everybody in Cleveland know minority got ‘Obama phone,’” the woman says. “Keep Obama in president, you know, he gave us a phone … Romney, he sucks, bad.”

Now TracFone, the wireless service with the largest government contract for the program, wants you to forget all that – and keep almost a half-billion dollars in federal money coming – with an ad blitz reminding lawmakers that the program to subsidize landline phone service for the poor goes back to Ronald Reagan was expanded to cell phones in 2008, under George W. Bush.

And if TracFone, the pre-paid service provider controlled by Mexican billionaire Carlos Slim, has a CEO who was also a major fundraiser for Obama’s re-election campaign, well, that’s just business.

According to Politico, lawmakers leading the effort to defund “Obama phones” are Sen. David Vitter, R-La., and Rep. Tim Griffin, R-Ark. Sen. Claire McCaskill, D-Mo., meanwhile, is also trying to have Lifeline funds transferred to a new schools program.

“TracFone is upset because I’m fighting to end this program, which would also end their corporate welfare,” Vitter wrote in an email, according to Politico. “ …[I] t’s an out-of-control, fraud-ridden entitlement program that spoils what should be a worthwhile helping hand.”

Griffin agrees.

“Their cash cow is under scrutiny and is at risk,” he told Politico, which said a bill Griffin sponsored to defund “Obama phones” has 60 co-sponsors.

And it is a cash cow.

According to a CNNMoney report from October, it works like this:

People who qualify for government assistance, such as Medicaid or food stamps, are eligible for a monthly subsidy for phone service of $9.25 from the federal government. Carriers like TracFone then employ teams to sign up poor people, give them free phones and bill the government for the phone use.

That added up to $452 million for TracFone in 2011, double what the company got two years earlier, according to CNNMoney. In the same period, AT&T, and Sprint collected about $274 million each.

That money – about $1 billion in 2011 – comes from a monthly surcharge on cellphone bills that averages about $2.50 per customer, according to Politico.

In other words, from you.

And that’s too much for too long, Griffin told Politico.

“I don’t give a rip who started it,” he said. “Whoever started it and whether you call it an ‘Obama phone,’ I’d like it be known as ending in 2013.”

HT: Breitbart

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