O'Keefe Releases New Highly Edited Video Smearing Lifeline Low-Income Phone Program

New O'Keefe Video Attacks Program To Provide Low-Income Americans With Access To Phones. Conservative activist James O'Keefe released a new highly edited video that purports to show people inappropriately receiving free cell phones after announcing an intention to sell them to purchase drugs and to pay bills. The phones were being distributed as part of a federal program to provide low-income Americans with access to phones. The raw footage of the video, however, shows that none of O'Keefe's actors who claimed that they were going to sell the phones for unrelated purchases actually received phones. [Media Matters, 6/18/13]

Fox News Hosts O'Keefe, Pushes Falsehood That Taxes Fund Low-Income Phone Program Featured In His Video

O'Reilly: Lifeline Phone Program Is “Ripping Off The American Taxpayer.” Fox's Bill O'Reilly interviewed James O'Keefe to promote his highly edited video. Throughout the segment, O'Reilly pushed falsehoods about the Lifeline program's finances, saying that “the government gives tax money” to companies that provide free cell phones to eligible Americans, and that the program is “ripping off the American taxpayer.” O'Reilly also presented the cost of the program in the context of the country's national debt. [Fox News, The O'Reilly Factor, 6/18/13]

Hannity: “Your Hard-Earned Tax Dollars Are Paying For” Low-Income Phone Program. Fox News host Sean Hannity also promoted O'Keefe's video and claimed that the Lifeline program was funded by taxes, saying that “your hard-earned tax dollars are paying for” the program and that “you spent $2.2 billion on this program just last year alone. Pretty unbelievable.” [Fox News, Hannity, 6/18/13]

Bolling: O'Keefe Video Shows “How Our Money Is Being Spent.” Eric Bolling, co-host of Fox's The Five, introduced O'Keefe's highly edited video by saying: "$2 billion tax dollars later, let's see how our money is being spent now." [Fox News, The Five, 6/18/13]

Lifeline Program Is Funded By Telecommunication Companies, Not Taxpayers

FCC: Lifeline Provides Affordable Phone Service For Low-Income Americans. From the Federal Communications Commission's guide to the Lifeline program:

Lifeline is a government benefit program that provides discounts on monthly telephone service for eligible low-income consumers to help ensure they have the opportunities and security that telephone service affords, including being able to connect to jobs, family, and 911 services. Lifeline is supported by the federal Universal Service Fund (USF). [Federal Communications Commission, accessed 6/19/13]

Programs Providing Phone Access To Low-Income Americans Paid For By Telecommunications Service Providers. From an explanation of how Lifeline and similar programs are funded from Maine's Department of Health and Human Services [emphasis original]:

Who Pays for the Lifeline and Link-Up Programs?

All telecommunications service providers and certain other providers of telecommunications must contribute to the federal USF based on a percentage of their interstate and international end-user telecommunications revenues. These companies include wireline phone companies, wireless phone companies, paging service companies, and certain Voice over Internet Protocol (VoIP) providers.

Some consumers may notice a “Universal Service” line item on their telephone bills. This line item appears when a company chooses to recover its USF contributions directly from its customers by billing them this charge. The FCC does not require this charge to be passed on to customers. Each company makes a business decision about whether and how to assess charges to recover its Universal Service costs. These charges usually appear as a percentage of the consumer's phone bill. Companies that choose to collect Universal Service fees from their customers cannot collect an amount that exceeds their contribution to the USF. They also cannot collect any fees from a Lifeline program participant. [Maine Department of Health and Human Services, accessed 6/19/13]

FactCheck.org: Lifeline Is Not A “Taxpayer-Funded Program.” A May 2012 FactCheck.org article responding to Republican Congressman Tim Griffin's (AR) web video about the Lifeline program noted that it is not funded by taxpayers:

Griffin's video focuses on Lifeline, a federally mandated program that reimburses phone companies with a monthly subsidy of $9.25 for each low-income customer who uses a landline or a cell phone. The program has allowed millions of persons living under or just above the poverty line to acquire cell phones -- once considered a luxury -- for free.

Lifeline is funded by telecom customers who pay a universal service fee as part of their phone bills. The fee technically is not a tax but a cross subsidy, the rules of which are determined by the Federal Communications Commission.

[...]

Griffin's video portrays Lifeline as a taxpayer-funded program. Technically, it's not. Telecom customers cover the cost.

[...]

[T]he universal service fee is not a tax but a cross subsidy overseen by the FCC. The U.S. Treasury does not collect or handle the funds. Griffin's description goes too far. [FactCheck.org, 5/22/12]