Well-intended federal programs can leave taxpayers blue

The Oklahoman Editorial Published: February 22, 2013
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CORPORATE welfare comes in a variety of forms. The very definition of the term is elastic. It usually turns on how valuable you believe a particular form of government spending is.

If residents of the 405 area code are forced to get a new phone number sooner than expected, they might think one form of corporate welfare isn't so valuable. What we're talking about is subsidized phone service for low-income residents. Customers and taxpayers foot the bill. Phone companies reap the benefits.

In years past we complained about the “Gore tax,” an add-on to telephone bills prompted by then Vice President Al Gore. Like the subsidized phone service, the “Gore tax” was a program with good intentions but wasn't necessarily a good deal for the customers paying extra to cover telecom services for others.

The Wall Street Journal reported Tuesday that Oklahoma is at the center of a developing controversy over a subsidized phone service that's characterized by explosive growth. The customer base is expanding so rapidly that the 405 area code might have to be split into two area codes sooner than expected.

Of course this split is inevitable; only the timing is in question. We have less concern about the split than we do with the probity of the program's subsidy system.

“Waste and fraud in this vital program are simply unacceptable,” a Federal Communications Commission spokeswoman told the Journal. We're not sure how vital this program is, but it's clear that well-intentioned federal programs can sometimes degenerate into misuse, abuse and outright fraud.

The Oklahoma Corporation Commission is investigating suspicious use of Lifeline funds by small phone companies. One small provider in Oklahoma got about $46 million under the program in 2012, according to a “show-cause” letter sent by the commission to the provider. As with any form of subsidized behavior, people and companies respond by taking advantage of a situation. Providers are accused of sleazy and unorthodox practices such as signing up customers in hospital emergency rooms, the Journal reported. Some providers are apparently mailing cell phones to customers who didn't ask for them.

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