'Obama phones' started under Reagan but expanded recently with few safeguards

A federal program offering phone service discounts to lower-income residents has been in effect since the Reagan administration in the 1980s, and was expanded under George W. Bush to include cell phones, but critics of President Obama have dubbed the devices "Obama phones" as an example of how the government is handing out too many freebies, Karen Tumulty reports for The Washington Post. (Above: Glenda Pate talks on her Lifeline phone. Talequah Daily Press photo by Rob Anderson)

As part of the program, 13 million low-income subscribers receive an average discount of $9.25 per month on phone service, Tumulty reports. Senior republicans on the House Energy and Commerce Committee say the program "has nearly tripled in size from $800 million in 2009 to $2.2 billion per year in 2012." The committee is holding a hearing this month to discuss the program, which is funded by the Universal Service Fund, supported by fees on telephone bills. The fund also subsidizes rural phone service.

"When it was expanded to cover cellphone service in 2008, regulators included few safeguards against fraud, Tumulty writes. "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." (Read more)