Mexican billionaire making millions from American government program that gives poor free cell phones

By Daily Mail Reporter

PUBLISHED: 02:17, 11 October 2012 | UPDATED: 02:17, 11 October 2012

http://www.dailymail.co.uk/news/article-2215966/Mexican-billionaire...

The richest man in the world, Mexican billionaire Carlos Slim, is making millions in profits from a government program that supplies poor Americans with free cell phones.

Mr Slim, who is worth an estimated $69billion, owns the parent company of both the service provider and phone producer which creates the phones used in the Lifeline program.

The government program was originally enacted under President Reagan's administration in an effort for poor Americans without access to phones to have a way to contact prospective employers, arrange for healthcare, and be in touch with their children's schools.

Moneymaker: Carlos Slim, who is worth an estimated $69billion, owns the parent company of both the service provider and phone producer which creates the phones used in the Lifeline program

Republicans have since attacked the program, attributing the sizeable increase in phone recipients over the past four years to President Obama and decrying that it is an example of a wasteful government handout.

The renewed debate over the decades-old program was sparked by a video of a woman in the battleground state of Ohio who said that she and 'everybody in Cleveland, every minority, got an Obama phone. Keep Obama as president. He gave us a phone. He gonna do more.'

Widespread: In 2011, there were 3.8million subscribers to the government's Lifeline program, which provides low-income Americans with free TracFone phones

Though President Clinton was the one to begin the process of offering either landlines or cell phones to low-income Americans after he enacted the Telecommunications Act in 1996, the program has grown dramatically between 2008 and 2011.

According to Fox News, the cost of the Lifeline program more than doubled from $722million in 2008 to $1.6billion in 2011. The exact number of recipients of said phones in 2008 is not clear but the latest 2011 calculation puts the figure at 3.8million subscribers.

Predictably, the increase coincides with the recession so it comes as little surprise that more people qualified for the program which dictates that any phone recipients have an income of 135 per cent below the poverty line.

While the economics of distribution of the Lifeline phones has little partisan bias, the money that comes from the program does have a political persuasion.

Republicans, like Arizona Congressman Tim Griffin, say that the program wastes taxpayer money.

'I simply do not think that the taxpayers should be footing the bill for someone’s cell service and social interaction,' Mr Griffin said recently.

'If that’s the case, what should the government pay for and not pay for? Let’s just start paying for everyone’s gas.'

Help: The phones are intended to give poor people the chance to make necessary phone calls like to medical care providers, possible employers, or their children's teachers

That sentiment is not correct, however, as Gawker points out that the funding for the service comes from fees to the Universal Service Fund paid by some of the country's largest phone companies. One example that they give, Verizon Wireless, makes their users pay the cost of the Universal Service Fund,  that is not a government-mandated fee.

They also take issue with the fact that the wealthy men who profit from the production of these phones for low-income citizens are directing some of those profits into the Obama re-election campaign war chest.

Though Mr Slim is a foreign national, some of his underlings have close financial ties to Mr Obama.

Expanding: Conservatives take issue with the fact that the cost of the program has more than doubled since President Obama (seen here at a campaign event on Tuesday) took office

Mr Slim owns Movil America, which in turn owns Simple Mobile, the service provider for the Lifeline phones, and TracPhone, the company which produces the physical phones themselves.

TracPhone makes $10 profit per Lifeline phone, which when added up based on the amount of program enrolees, equates to millions in profit.

A direct recipient of said profit is Frederick 'F.J.' Pollak, the CEO of TracPhone who is also a large Democratic donor.

Mr Pollak and his wife Abigail, who is a campaign bundler for the president having raised more than $1.5million since 2007, have given thousands to the re-election campaign.

In addition to the combined total of $788,500 that the couple has raised for the president in this fiscal cycle, they also played hosts to $40,000-per-plate fundraising dinners for both the President in June and the First Lady in July 2008.