Sen. Claire McCaskill is at the center of an increasingly pitched lobbying battle over a controversial federal program that provides subsidized phone service to low-income Americans.
McCaskill, D-Mo., has joined a mostly Republican-led crusade to kill or reform the program, called Lifeline, which she and others say has been plagued by fraud and abuse.
But advocates for the poor — who say Lifeline is vital to helping seniors, minorities, veterans and others stay connected to their communities — have launched a campaign to counter the criticism. Also joining the fray are major telecommunications firms that benefit from the subsidies, including Sprint and TracFone, which sell prepaid cellphones and have more than three million Lifeline subscribers.
About a dozen telephone company executives and minority-rights advocates have met with McCaskill or her staff in recent weeks, hoping to soften her stance on the program. Supporters are pushing for reforms to Lifeline, hoping that will stave off more draconian legislative action.
David Honig, president of the Minority Media and Telecommunications Council, which promotes equal access to telecommunications tools, said Lifeline is “very effective” at bridging the digital divide.
“This enables people to stay in contact with family members, to reach and be reachable by employers and potential employers, to contact health care providers and to access emergency services,” he said.
Critics paint a different picture.
“It’s turned into Uncle Sam’s Unlimited Plan,” Rep. Tim Griffin, R-Ark., says in a statement posted on his website, where he has highlighted the issue and his efforts to nix the program. “It’s a government-run, taxpayer-funded program that’s running wild and costing more and more.”
McCaskill’s involvement in the issue has put her in an odd-bedfellows alliance with Republicans like Griffin and Sen. David Vitter, R-La. McCaskill was the lone Democrat to vote in favor of a nonbinding amendment, sponsored by Vitter in March, to kill the Lifeline program.
Among some conservative activists, the Lifeline program has become a hot button topic, as well as a source of misinformation. Some have labeled the program “Obama phone” and claimed —inaccurately — that the Obama administration is using Lifeline to hand out free cellphones to the poor.
McCaskill dismisses the “Obama phone” rhetoric as misinformed, partisan hyperbole. But she has also called for an audit and an overhaul of the program.
How did the Missouri Democrat get involved with an issue that has been championed mostly by GOP lawmakers and right-leaning activists? She got a mailer at her condominium in Washington, soliciting her to sign up for a free phone.
To be eligible for the subsidy, consumers must have an income that is at or below 135 percent of federal poverty guidelines or be eligible for other safety-net programs, such as Medicaid or food stamps. But numerous reports have documented fraud in the program, with unqualified people receiving the prepaid phones and some households getting more than one subsidized phone line.
“We have no idea how many phones people are actually getting,” McCaskill said.
She said the program is “well intentioned,” but “the execution was about as bad as it can get.”
The Lifeline program is not funded by tax dollars but by a “universal service” fee that appears on everyone’s phone bill, with the average household paying about $2.50 per month. That fee goes to the Universal Service Administrative Co., a nonprofit company overseen by the Federal Communications Commission that runs four programs — including Lifeline — aimed at making telecommunications services available to rural and low-income Americans.
In 2012, USAC spent $8.7 billion on the four programs, including $2.19 billion on Lifeline. Under the Lifeline program, started in 1985 during the Reagan administration, telephone companies are reimbursed $9.25 for each low-income customer they provide with a land-line or cellphone connection.
The program has grown in recent years, fueled in part by a spike in prepaid cellphones. Some companies have used the program to give out free cellphones loaded with prepaid minutes to Lifeline enrollees, using what critics call “aggressive marketing” practices to sign up ineligible participants.
Even supporters acknowledge the program has been riddled with fraud.
Recently, the Community Action Partnership, an anti-poverty organization, joined with two consumer groups to call on the FCC to ban the same-day distribution of prepaid wireless phones to Lifeline participants. Making it harder for companies to ignore verification requirements will “weed out” bad actors who have abused the program, they said.
“Low-income consumers aren’t the problem,” said John Breyault, vice president of public policy, telecommunications and fraud at the National Consumers League. “The problem is overly aggressive marketing by a handful of companies.”
He and other advocates said they hope such reforms would quiet the talk in Congress of killing the program.
“We want to show Sen. McCaskill … that this program is worthwhile,” said Donald Mathis, president and CEO of the Community Action Partnership. “It helps tens of thousands of people in Missouri, millions across the country.”
The FCC has already taken some steps to crack down on fraud, moving in February to require that phone companies certify beneficiaries’ eligibility before signing them up and to re-check their status annually.
“We’ve also been going on a state-by-state basis and looking for duplicates and de-enrolling people,” said Eric Iversen, a spokesman for USAC.
He noted that amid the reforms, the Lifeline rolls have shrunk from a peak of 18 million subscribers last year to about 13.5 million now.
But McCaskill and others say those steps fall short of what’s needed. In May, McCaskill asked the U.S. comptroller general to conduct an audit of the program. In June, she called on the FCC to transfer all the Lifeline funds to a program called ConnectedED, which is aimed at providing high-speed broadband to schools and libraries around the country.
And in July, McCaskill told reporters she planned to use her chairmanship of a key Senate subcommittee to probe not just Lifeline, but three other related initiatives run by the Universal Service Administration Co.
“I’ve got a new project, which is going to be looking at USAC in its entirety and see who is minding the store and who is deciding how this money is being spent,” McCaskill said. McCaskill said she is mulling her next steps — she may hold hearings or ask for a broader investigation of Lifeline by the General Accountability Office.
“I know that we can do a better job of serving this population,” she said.
Jose Fuentes, a spokesman for TracFone, which is owned by Mexican media mogul Carlos Slim, said company officials have met with McCaskill several times, and they see her as a moderate voice in the debate — someone who could possibly counter more strident GOP critics in Congress.
“Her colleagues have made this a political issue, and they’ve run with this,” Fuentes said. “Hopefully we’ll be able to help her move more toward reforming the program, rather than eliminating it.”
But Honig, of Minority Media and Telecommunications Council, said he’s not looking to McCaskill as a savior for the program.
“It is unfortunate that Sen. McCaskill, who has been supportive of so many important governmental initiatives, would be so hostile to the Lifeline program,” he said.
GANNETT NEWS SERVICE