Griffin: Growing Lifeline Program Is Costing American Consumers and Taxpayers

Nov 29, 2011 Issues: Spending Cuts and Debt, Tax Reform

WASHINGTON – Congressman Tim Griffin (AR-02) issued the following statement after introducing the Stop Taxpayer Funded Cell Phones Act (H.R.3481), which will save American consumers billions of dollars in a program many view as an example of government waste:

“I have heard from numerous Arkansans who have shared stories of dead relatives receiving free cell phones in the mail, individuals abusing the system by obtaining numerous free cell phones and recently I saw an electronic kiosk in a convenience store promoting free cell phones, all through a government run and taxpayer funded program called Lifeline.  My bill returns the Lifeline program back to its original structure by ending federal subsidies for free cell phone services.  This growing government cell phone program is costing American consumers and taxpayers, and my bill puts an end to it.”

The Lifeline Program was established in 1984 to subsidize landline phone service for low-income individuals.  Under the program, telecommunications carriers submit reimbursement requests to the government-run Universal Service Fund (USF) to receive a subsidy for services provided to qualifying low-income subscribers.  The USF is funded through fees collected from telecommunications carriers which are directly passed onto their customers, as part their telephone bill.

In 2008, the Lifeline Program was expanded to include wireless service providers.  Between 2008 and 2009, non-landline costs for the program doubled – from $143 million to $384 million – and then doubled again, totaling over $719 million in 2010.  Before the certification of the first wireless carrier, the overall Lifeline Program cost $822 million per year, an amount consistent with the previous five years.  That number grew to $1.025 billion in 2009 and to $1.315 billion in 2010.   According to the Federal Communications Commission, it is common for multiple wireless service providers to seek reimbursement for Lifeline services provided to the same household.