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Obamaphone Lifeline Program Under Fire For Waste And Fraud

August 26, 2013 Leave a comment

More government failure on display.

Categories: Cut Government, Video

Why are they called Obamaphones?

August 26, 2013 Leave a comment

Because he’s responsible for opening the flood gates of funding so everyone could abuse another government program all the while lining the pockets of his buddy who owns trac phone.

http://nationalreview.com/node/354867/print

AUGUST 1, 2013 4:00 AM

Me and My Obamaphones

Not on welfare or below the poverty line? Never mind — here’s your free phone.

By  Jillian Kay Melchior

Confession: You’re paying my phone bill.

In the past month, I have received three shiny new cell phones, courtesy of American taxpayers, that should never have fallen into my hands.

The Federal Communications Commission oversees the so-called Lifeline program, created in 1984 to make sure impoverished Americans had telephone service available to call their moms, bosses, and 911. In 2008, the FCC expanded the program to offer subsidized cell-phone service, and since then, the expenses of running the program have soared. In 2012, the program’s costs had risen to $2.189 billion, up from $822 million before wireless carriers were included. As of June, there were 13.8 million active Lifeline subscriptions.

To be eligible for Lifeline, the applicant is supposed to be receiving some significant government benefit — food stamps, Medicaid, Supplemental Security Income, public housing assistance, etc. But because welfare eligibility has expanded under the Obama administration, more people than ever before are qualified to receive “free” cell-phone service — part of the reason why Lifeline mobiles have become commonly known as Obamaphones. Alternatively, applicants can qualify if their household income is less than 136 percent of the federal poverty line.

But as with any federal program with too much funding, too little oversight, and perverse financial incentives, Lifeline has become infamous for rampant fraud and abuse. There have been news reports about recipients flaunting dozens of subsidized phones. And in February, the Wall Street Journal reported on an FCC audit of the top five Lifeline providers, which found that “41% of their more than six million subscribers either couldn’t demonstrate their eligibility or didn’t respond to requests for certification.”

The FCC supposedly buckled down on eligibility standards last year and established other safeguards aimed at reducing fraud. I was curious about how tough it was to get one of these phones, so last month, I hit the streets of New York. And out of respect for the law and my journalistic integrity, I did not lie to obtain a phone.

Now is the point, I suppose, where I should explain that I really, really shouldn’t have received a single phone. Despite what you hear, not all 20-something writers in the Big City are starving. Given my earnings, even if I were supporting a family of eight, my income would still rule me out. Nor do I receive any type of government benefit. By the Lifeline program’s standards, I am unambiguously ineligible.

My first task was figuring out where to register. The rule of thumb is that wherever you can sign up for food stamps, you can apply for an Obamaphone.

Representatives from SafeLink and Assurance, two of the leading New York Lifeline vendors, stand outside the food-stamp offices, paired like Mormon missionaries, young and polite and earnest. They carry electronic tablets and ask all passersby whether they’ve received their free phone “yet” — as if it were an inevitability.

They approached me for the first time outside the food-stamp office at Tenth Avenue and 216th Street, on the northern tip of Manhattan. The SafeLink vendor, a man probably in his mid 20s, asked me whether I was enrolled in any benefit programs.

“No,” I said, “but I’d certainly like to be. I’m hoping to be.” And indeed, while doing research for another story, I had gone through the motions of applying for New York City welfare, which I also don’t qualify for. I showed him my Human Resources Administration paperwork packet and the case number assigned to me. I reiterated that though I had once applied, I had never been approved for any sort of benefit.

He brought out his electronic tablet immediately to sign me up for phone service. He asked if I had an insurance card, so I pulled out my trusty Blue Cross Blue Shield. He looked at it for a second, puzzled, then asked if I had Medicaid. No, I told him, just private insurance through my work plan.

“Private insurance? What’s that?” he asked, maybe not facetiously. My BCBS card was nevertheless photographed, as well as the first page of my Human Resources Administration paperwork. He asked for my name and my home address, and that was about it. The whole process took less than five minutes, and I had to provide no documentation verifying my income level or (nonexistent) welfare status.

The SafeLink vendor then referred me to his opposite number, a rep from Assurance. She too took down my information, registering me for another Obamaphone.

Traveling to several of the welfare offices in the city, I learned this was common practice. Obamaphone reps come in twos, and both will sign you up if they can.

That’s a very questionable practice, given the Lifeline program’s rules: Each eligible household may receive only one Lifeline subsidy, and obtaining multiple subsidized phones from multiple Lifeline carriers is “a flat-out violation of our rules,” says Michelle Schaefer, an attorney-adviser from the FCC’s Telecommunications Access Policy Division, Wireline Competition Bureau.

Schaefer also tells me that “consumers are, on their applications, required to certify under penalty of perjury that they will only be receiving one Lifeline discount.”

But when I went around New York signing up for multiple phones, I never even saw the applications; SafeLink and Assurance vendors filled out the necessary forms on their tablets on my behalf, clicking through so quickly that it must have been nearly muscle memory. And nobody mentioned perjury.

Granted, the first question the wireless reps asked was usually whether I was already enrolled in the Lifeline program. I told the truth: I had signed up recently, but the phone hadn’t arrived in the mail yet. Almost always, that got me re-entered into the system without hesitation.

When I did receive my SafeLink phone a few days later, I started informing vendors that I did have one Lifeline phone. They assured me that the Lifeline program permitted me to have one phone from each participating wireless provider — which simply isn’t true.

Maybe there’s a disconnect between the corporate offices of wireless providers and their men on the street; a letter I later received from Assurance mentioned that “a household is not permitted to receive Lifeline benefits from multiple providers. Violation of the one-per-household rule constitutes a violation of federal rules and will result in de-enrollment from the Lifeline program and potentially prosecution by the United States government.”

But the wireless providers aren’t doing much due diligence, if my experience is indicative.

At the Union Square location, a SafeLink rep noted that I was already approved for a phone and declined to re-enter my information — but the rep from Assurance, standing only a few feet away, readily signed me up.

At the welfare office on Schermerhorn Street in Brooklyn, a vendor hesitated when I told her that I’d already applied but the phone had not yet been delivered. “Surely your system will catch if I’m actually enrolled,” I told her. She shrugged and signed me up once more.

At the DeKalb Avenue office in Brooklyn, when I told the rep I wasn’t receiving welfare, I was signed up for a phone but cautioned that I might well be denied upon secondary review.

And at one Lifeline location in East Harlem, I walked up to the wireless representative talking very loudly on my own smartphone. I hung up only to answer her questions. Now, keep in mind that the program is supposed to provide cell-phone service to people too poor to afford any phone whatsoever — but my application for a subsidized mobile was happily submitted, even as I dinked around very obviously on my existing smartphone.

So here’s the final count: I was able to apply on the street for one SafeLink phone and seven Assurance phones. I received one SafeLink phone and two Assurance phones, no questions asked. For several other applications, Assurance sent me requests for more financial information.

Finally, I received one other letter, full of grammatical errors, informing me that “there is already an Assurance Wireless account established at this address” and requesting further information about my application. I find it curious that Assurance caught a duplicate only once, considering that I’ve got seven entries in their system, and that they have on file my name, address, HRA case number, and, in some instances, photos of my insurance card and driver’s license. SafeLink was slightly better about catching duplications on the street, but it still gave me a phone when it shouldn’t have.

Since receiving my undeserved phones, I’ve repeatedly tried to reach both SafeLink and Assurance press reps for comment, all to no avail. Their corporate offices have sent me the numbers of their customer-service centers, which are easily accessible and happy to offer plan upgrades to Lifeline clients.

Representative Tim Griffin (R., Ark.) has long opposed the Lifeline wireless subsidies, making it a pet cause. He reiterated the basic point I had learned from this experience: The problems began when the federal government got in the business of providing free cell phones, and the FCC’s recent reforms aren’t sufficient.

“I saw all the horror stories of people getting 10, 20, 30, 40 phones,” Griffin says, “the [wireless] companies not paying a lot of attention and in some cases no attention to who was getting them and whether they were getting duplicates.”

And if you’ve been wondering why the companies are so eager to hand out free phones, the incentive is built into the program. As Griffin explains, “Of course, the way the program was set up, [wireless companies] were getting money for every one they could give out, so they gave out as many as they could.”

And still do.

— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity.

Categories: Cut Government

The Banking System Explained

March 29, 2013 Leave a comment

The Banking System Explained

Porter Stansberry: The U.S. banking system is a mirage
Saturday, March 23, 2013

 The latest news out of Cyprus – the government levying taxes on bank account holders – is very, very interesting…
If you understand it on a deep level, Cyprus’ actions cut to the core of whether we are going to live in a socialist world or a capitalist world. Banking is at the center of the economy… And the policies you set in banking determine who gets capital and under what conditions. That’s the definition of capitalism: how to allocate capital and under what terms.
Right now, the world is completely socialist, because every deposit and every bank is government-guaranteed.
 Do you remember the first thing that happened during the fiscal crisis of 2008 and 2009? The Feds said, “You have to have higher deposit guarantees.” With higher guarantees, there was no reason to have a run on banks… In the case of a bank failure, every depositor would get every penny back.
The Fed had to increase its deposit guarantees because when the first couple banks failed, the Federal Deposit Insurance Corporation (FDIC) limits were $100,000. Some people lost money. Because of that, people were moving money around to different banks.
After the crisis, the FDIC raised the limit to $250,000.
 The 2008 crisis happened because banks made bad lending decisions and lost money. But who should be responsible for those bad lending decisions? Is it the bank and its depositors or is it the taxpayers? In capitalism, you have to be responsible for your own economic choices. That’s how the economy is guided…
And if you allow people to make economic decisions without consequences, you’ll end up with a lot of malinvestment. You’ll have a dysfunctional economy. And that’s what we’re seeing in the world today because nobody is responsible for their bad decisions. Problems get papered over (thanks to government bailouts) and society as a whole pays for them in the form of inflation.
 In Cyprus, the European Union tried telling every depositor to pay a tax of 10% to cover the losses in Cyprus’ banks. And depositors said, “Hell no! We’ll take our money out of the bank so you can’t tax us.” It’s interesting that bank runs are caused by regulators today… because at the end of the day, they control everything. That’s socialism, not capitalism.
What happened in Cyprus doesn’t have any direct implications for the U.S. banking system… Our banking system is already so thoroughly socialist, we won’t have any runs on the bank… We have the printing press, we have the reserve currency, and we have Fed Chairman Ben Bernanke, who will print as much money as he feels is required at any time.
 But realize something… If we were truly living in a capitalist world, who you choose to bank with (where you choose to place your cash) would become an important decision. You would want to bank with people who make wise lending decisions. Today, you don’t have to think about your bank, because your money is always guaranteed… There’s no consumer preference for well-run banks. And if there’s no preference for well-run banks, you’ll get a bunch of crappy banks, which is what we have… And crappy banks make crappy loans.
 For example, today, automaker General Motors can lease cars to subprime borrowers. There’s no way these subprime borrowers should be allowed to get a new car. It’s absurd. And yet because there is no consequence to making a bad loan (or lease, in this case), that’s how the economy operates. This is a big mistake…
 We’d be much better off if people had to be responsible for their own economic decisions… and that starts with where you put your money in the bank.
But we don’t have that… We haven’t had that kind of freedom in the U.S. since before the Great Depression. And it’s a shame. In places where you have free banking – like Hong Kong and Switzerland – you have much better economies. You have much better per-capita GDP growth, more wealth, and more freedom.
The lesson of the Cyprus bank levy is that you can’t have a system where depositors face no risk. If there is no risk, there is no incentive in the economy for making wise capital-allocation decisions… Therefore, the economy will become stagnant and there will be no growth or wealth created.
Think about it this way… What if the government were to guarantee the dividend payments from every Fortune 500 company? So no matter how bad the product development was, no matter how bad the marketing was, no matter how many people were employed who shouldn’t be… the government would always guarantee the dividend payments.
There would be no reason for management to do a good job or make wise decisions.
 Ask yourself: Where would the economy be if the government guaranteed everything?
The economy would be in the toilet very quickly. For an economy to function properly, there has to be a risk of loss. For an economy to grow, you need consequences for failure, just as you need positive incentives for success. Today, we live in this incredibly phony world where there is no punishment for failure (for neither depositors nor bankers). It’s insane.
So how do we right this ship? Unfortunately, you’d have to go back to the beginning and not guarantee deposits.
Look at the U.S. banking system. Look how much capital is deposited in U.S. banks versus the actual reserves at these banks.
Bank of America, for example, holds $1.1 trillion in deposits. Against that, it holds $457 billion in liquid assets – a $643 billion shortfall. Withdrawal requests are instantaneous… It would take the bank much longer to actually sell those assets in order to meet withdrawals. And should that situation occur, the value of the assets it’s liquidating would be impaired.
The Federal Deposit Insurance Corporation (FDIC) is the entity responsible for insuring bank deposits. But it doesn’t have any money. The whole thing is a mirage… The power of the printing press is the only thing standing behind this insurance.
 If you were actually going to insure that capital, banks would need vast reserves. No insurance companies are big enough to insure the U.S. banking systems’ deposits. There’s nowhere to put all the money. But this is a sign of fractional reserve banking and the paper-money system we have today.
This is what leads to inflation… It’s the cause of business cycles… And it’s what will inevitably lead to some kind of collapse.
 Do I think the issues in Cyprus are the beginning of the collapse? No, it’s just part of the process. The collapse began in 2007 with the demise of the subprime mortgage market. That led to the collapse of the prime mortgage market in 2008, which led to the collapse of Lehman Brothers and Bear Stearns.
If it weren’t for the government printing press, we would have seen a global run on the dollar and a collapse of the global banking system. We’re still suffering the consequences of these things today. So I don’t know exactly where we are in terms of the timeline… maybe the sixth or seventh inning.
But when this process ends, we’ll see a total flight from the U.S. dollar… Because the dollar underlies the entire banking system (whether in Cyprus or the U.S., all reserves are in dollars). Eventually, people will flee the dollar system as a whole.
Regards,
Porter Stansberry
Categories: Cut Government

President Armageddon

February 23, 2013 Leave a comment

President Armageddon

President Obama returned from a long weekend with his golfing buddies on Tuesday to take up his by now familiar political stand: If Republicans don’t raise taxes in return for more spending, the world will end. We wish he’d stayed on the putting green.

Flanked by emergency medical personnel, Mr. Obama made his usual threat of Armageddon if automatic spending cuts go forward on March 1. Americans can expect more such melodrama in the coming days, so as a public service we thought we’d break down the President’s three biggest political tricks.

• The Washington Monument ploy. “If Congress allows this meat-cleaver approach to take place,” he moaned, “it will jeopardize our military readiness; it will eviscerate job creating investments in education and energy and medical research.” His parade of horribles went on for several minutes. All of this wreckage from a 5% cut to domestic agencies and a 7% cut to the military.

Americans need to understand that Mr. Obama is threatening that if he doesn’t get what he wants, he’s ready to inflict maximum pain on everybody else. He won’t force government agencies to shave spending on travel and conferences and excessive pay and staffing. He won’t demand that agencies cut the lowest priority spending as any half-competent middle manager would.

It’s the old ploy to stir public support for all government spending by shutting down vital services first. Voters should scoff at the idea that a $3.6 trillion government can’t save one nickel of every dollar that agencies spend. The $85 billion in savings is a mere 2.3% of total spending. The agencies that the White House says can’t save 5% received an average increase in their budgets of 17% in the previous five years—not counting their $276 billion stimulus bonus.

• The recession scare. Mr. Obama warned that the sequester will “hurt our economic growth [and] add hundreds of thousands of Americans to the unemployment rolls.” But hasn’t Mr. Obama been telling us that the economy is coming back and the stock market is up?

Mr. Obama just whacked the economy with a roughly $160 billion tax increase in 2013 that he says will do no harm, but he wants us to believe that $85 billion in spending cuts will trigger a recession. The sequester shaves the equivalent of about 0.25% of GDP when offsetting it against the extra money the feds are spending on Sandy relief.

After World War II federal spending fell from 42% of GDP to 14.8% in two years, yet the private economy and employment roared back to life. In the 1980’s domestic spending fell by about two percentage points of GDP and in the 1990’s it fell by more than three. Those were decades of government austerity but rapid growth in private output and wealth. Mr. Obama has taken government spending from 21% to 24% of GDP, yet we’ve had the weakest economic recovery in three generations.

• A tax increase disguised as “tax reform.” Mr. Obama isn’t proposing to substitute other spending reforms for the blunt instrument of the sequester. He is actually demanding another tax increase on top of the one he just beat out of Congress. His trick is to pretend that this is “tax reform” that would eliminate loopholes, but this is the same President who insisted on more than $30 billion in tax breaks for big business (including $12 billion for the wind industry) in the fiscal-cliff deal.

For 30 years bipartisan tax reform has meant lowering tax rates in return for closing loopholes. But having already raised rates, Mr. Obama now wants fewer loopholes for those he dislikes while keeping the higher rates. This is nothing but a grab for more revenue so he and Democrats can keep spending.

The sequester is far from ideal and it would make much more sense to work with Congress to set priorities. But Mr. Obama has rejected every meaningful reform in entitlements that Republicans or his own Simpson-Bowles commission have offered. ObamaCare will add more than $1 trillion in new costs and add some 17 million people to Medicaid, but he says this can’t be touched. In his State of the Union address Mr. Obama proposed $83.4 billion in new spending, according to a tally by the National Taxpayers Union.

If Mr. Obama really wants to eliminate the sequester, Republicans are ready to negotiate. But if he won’t drop his tax increase and negotiate in good faith, as he hasn’t during his Presidency, then the sequester is the only way that any spending is going to be cut. The economy will be better for it.

A version of this article appeared February 20, 2013, on page A14 in the U.S. edition of The Wall Street Journal, with the headline: President Armageddon.

Categories: Cut Government

Duh?

September 17, 2012 Leave a comment

“Constitutionally and by precedent, the House of Representatives has the exclusive prerogative to originate bills to appropriate money, as well as to raise revenues. … No matter how Obama’s presidency is viewed, if we buy into the notion that it’s he whose spending binge is crippling our nation through massive debt and deficits, we will naturally focus our attention on the White House. The fact of the matter is that Washington has been on a spending binge no matter who has occupied the White House. In 1970, federal spending was $926 billion. Today it’s $3.8 trillion. In inflation-adjusted dollars that’s about a 300 percent increase. Believing that presidents have taxing and spending powers leaves Congress less politically accountable for our deepening economic quagmire. Of course, if you’re a congressman, not being held accountable is what you want. … Most members of our Republican-controlled House of Representatives say they’re against Obamacare. If they really were, they surely would attach a legislative rider or some other legislative device to the Department of Health and Human Services’ appropriation bill to ban spending any money on Obamacare; they have the power to. But they don’t have the political courage to do so, and their lives are made easier by the pretense that it’s the president controlling the spending. And we fall for it.” –economist Walter E. Williams

Categories: Cut Government, Politics

Clarification

August 29, 2012 Leave a comment

Let’s be clear.   The government doesn’t “make”  jobs.   They can get out of the way by removing restrictions and lowering the tax burden but it’s the private sector that makes jobs.  

Categories: Cut Government, Misc., Politics

Paul Ryan: Hiding Spending Doesn’t Reduce Spending

August 13, 2012 Leave a comment

My mom is right. I need to watch more C-SPAN. This is a great example of what Paul Ryan stands for and is attempting to do.

Categories: Cut Government, Video