Let's stipulate that these phones are NOT "Obama phones," and that the program was begun before he took office. Still, the attitude and the pattern of freebies is illustrative of what I was talking about in this section from "A Nation of Moochers."
The free cell phones are a good example. Fifty two year old Leon Simmons and his wife make only about $1,600 a month after taxes. Out of that, they are able to pay $159 a month for a landline telephone, high speed internet access, and cable television.
But under a new program of “wireless welfare,” they get their cell phone for free, complete with caller ID, call waiting, and voicemail. In a story on the rapid growth of the program, Simmons told the New York Times that he thought people walking around talking on cellphones look “silly.” But, he says, he’ll use his new one, and why not?
“It’s free,” he explained. As indeed it is, along with government-backed free text messaging.[i]
Low income residents in a number of states are eligible to get free phones with limited minutes as long as they qualified for programs like Medicaid, food stamps, housing assistance, or other welfare program and had an income below 135% of the poverty level.
Few programs illustrate the “mission creep” of anti-poverty programs as clearly as the phone program, or how far many of those programs have drifted from a focus on providing basic needs to the destitute. Medicaid for the sick, shelter for the homeless, food for the starving…. cell phones for the unconnected? How far we’ve come. (A 2010 study by the Centers for Disease Control and Prevention found that 73 percent of adults listed as living in poverty nonetheless now own cell phones.)[ii]
Most of those phones are distributed through a Mexican-owned company called Tracphone. Since November, 2008, the number of customers receiving free or subsidized wireless service has more than doubled to 1.4 million.
Advocates have quickly turned the perk into an entitlement. The spokesman for the leading company offering the subsidized phone says, "Having a telephone service, just in general, is not a privilege, it should be a right of each one.” [iii] Presumably this means that they are also entitled to free text messages, call waiting, and caller ID as well.
 The cell phone freebies are subsidized by the Universal Service Fund, essentially a tax on phone service that was originally used to subsidize rural phone bills. The program was expanded in the Reagan years with the creation of the “Lifeline” program that provided modest subsidies for the phone bills of poor people. In 1996, Congress further expanded the subsidy program by creating the Universal Service Administrative Company with the express mission of ensuring "all Americans, including low-income consumers and those who live in rural, insular, high cost areas, shall have affordable service and [to] help to connect eligible schools, libraries, and rural health care providers to the global telecommunications network." While this subsidy was largely still limited to landline phone, in 2008 under the Bush Administration it spawned a further subsidy known as Safelink, which began providing free cell phones.
 Even so, Tracphone apparently wants to have it both ways. In web ads pushing the free phones to poor people in Wisconsin, for example, Tracphone touts: “FREE government supported cell phone.” But in a Lifeline/Safelink “Fact Sheet,” the company insists that “Safelink phones are not paid for by taxpayers or the federal government.” This is a quibble without a distinction, since the funds are paid for from the federally created Universal Service Administrative Company, which was created by Congress and set up by the Federal Communication Commission and funded by the Universal Service Fee, which is a tax in all but name.
[i] Matt Richtel, “Providing Cellphones for the Poor,” The New York Times, June 14, 2009
[ii] Alfred Lubrano, “Advocates say poor need available free cell phones,” Philadelphia Inquirer,” June 14, 2010
[iii] R.S. McCain, “Free cellphones for the poor!” posted on The Other Mccain, October 9, 2008 http://rsmccain.blogspot.com/2008/10/free-cellphones-for-poor.html