"It profits me but little that a vigilant authority always protects the tranquillity of my pleasures and constantly averts all dangers from my path, without my care or concern, if this same authority is the absolute master of my liberty and my life."

--Alexis de Tocqueville, Democracy in America

Thursday, February 9, 2012

I Don't Mind Being My Brother's Keeper, But I'm Not Too Keen on Being His Cell Phone Provider

Twenty years or so ago, I made some of my undergraduate students angry when I suggested that, because money is fungible, and because food stamps are essentially just another form of government currency, when the government gives someone food stamps, they are really just giving them money to buy whatever they want.   A dollar not spent on food, in other words, frees up a dollar to spend on something else.   My example was always cable television -- largely because I was always late with my own cable bill back in the bad old days of English instructor poverty, and always having to go over to the cable company office to pay my bill and get my cable turned back on, and always seemed to see a lot of somewhat sad sacks who looked like they might be on food stamps there (for all I know, they thought the same thing about me).  

I don't mind buying someone food if they're starving, I would say, but I sure don't want to buy them cable television.   But because money is fungible, and food stamps are money, to the degree that we give people food stamps we are also buying them cable television indirectly, if they then go out and buy it with their freed-up extra money.  

Needless to say, some of the more liberal undergraduates didn't like the food stamps = cable TV stamps argument.

Anyway, I've made the argument since to other people -- my wife would say ad nauseum.   Sometimes I use cable TV, but more often I use cell phones, which have become ubiquitous since then.   It's a much better analogy: there are something like 46 million Americans on food stamps now, but there aren't 46 million people who don't have a cell phone, and the usage of cell phones can be seen everywhere you look.   (Not to be a meanie, but something on the order of 90% of African-American children in America will at some point be the recipient of food stamps before their 20th birthdays, but at the same time 87% of African-Americans in 2009 had cell phones -- higher than the national average.   You do the math.)  

So, my argument would go, if you give someone food stamps, you're really giving them "cell phone stamps," since the extra marginal income doesn't allow them to by food (they'd buy that anyway if they had to do so not to starve), it allows them to buy something else, like, for instance, a cell phone.   Q.E.D.  

But, to me anyway, it was always just an argument.   It never occurred to me that the federal government actually did have cell phone stamps:

“Government’s programs, once launched, never disappear,” said Ronald Reagan in his 1964 “Time for Choosing” speech. “Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth.” And a finer example of the immortal nature of taxes and other government initiatives than the telephone tax you will never find. It was passed in 1898 to fund the Spanish-American war and stayed on the books in different forms until 2006, despite that conflict having ended in the same year it started. Added to this in 1996 was the Universal Service Fund fee, which was introduced in the Telecommunications Act of that year. And I bet you don’t know what it pays for.

Among the typically vague justifications for the levying of the Universal Service Fund fee — the best of which is to “promote the availability of quality services at just, reasonable, and affordable rates” — is that it pays for a program called “Lifeline,” which is not remotely as urgent or necessary as its name suggests. Bottom line: You are paying for millions of other people’s phone service with every call you make. 

There are currently 12.5 million wireless accounts registered under the scheme, which is administered by the FCC. Any American citizen who is on food stamps, Medicaid, or who earns up to 135 percent of the federal poverty line can apply. If an application is successful — and, given that the FCC actually advertises it by direct mail, who are we kidding here — the $1.6 billion program will pay for either a cell phone (up to the value of $30, of which there are many available) or a landline installation, and then pay your bill to the tune of $10 a month, which is roughly equivalent to about 250 minutes talk-time on an entry-level handset. To paraphrase Rick Santelli, Congratulations! You are now paying your neighbors’ phone bill.

The Lifeline program has become increasingly popular in the last few years, and spending on it has more than doubled, from $772 million in 2008 to $1.6 billion in 2011. It is now so popular, in fact, that many people have registered multiple times; an FCC audit conducted in 2011 showed that up to 269,000 wireless subscribers had free phones and cell service from at least two carriers. (And people who don’t qualify appear to like it, too.) These abuses have caught the attention of Democratic senator Claire McCaskill, who has called for an investigation.  

The FCC will be hard-pressed to do much about the abuse, however, as until it was investigated, it had not considered it necessary to build a database to keep track of its handouts. It has now rectified this and claims to have saved $33 million since the audit. Greater efficiency is always laudable; but nobody seems to have stopped and asked a basic question: Why is the federal government running a semi-secret program to equip 12.5 million Americans with phones and pay $10 of their bills each month?

 As Mark Steyn says, we're the brokest nation in history.   Why exactly are we spending $1.6 billion a year of our tax dollars to pay for people to have access to a technology that didn't exist a generation ago, i.e., something that Americans had managed to live without for, oh, about two hundred freakin' years of our history?!

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