Sen. Cruz Releases Plan to Protect Americans from Biden’s Hidden Phone Bill Tax

March 6, 2024

Lays Out Principles to Reform the FCC’s Uncontrolled Spending and Block Stealth Tax Hike 

WASHINGTON, D.C. – U.S. Senate Commerce Committee Ranking Member Ted Cruz (R-Texas) today laid out a plan to protect Americans from hidden tax hikes on their phone bills by reforming the Federal Communications Commission’s (FCC) Universal Service Fund (USF). The white paper, “Protecting Americans from Hidden FCC Tax Hikes: A Blueprint for Universal Service Fund Reform,” lays out a set of eight principles to rein in the FCC’s uncontrolled spending and regressive tax burdens on consumers.

The FCC unilaterally decides how much to tax Americans to pay for the USF and its four component programs meant to subsidize high-speed internet use. Due to mission creep by the agency, the USF has become financially unsustainable and has resulted in a tax of almost 35 percent on consumers’ monthly phone bills. This comes as a new Gallup poll shows Americans are more inclined to say that they are worse off financially and that it is harder to buy things.

Upon releasing the principles, Sen. Cruz said:

“With Bidenflation still untamed, the last thing the government should do is increase taxes on American consumers. And, yet, that is precisely what the Biden-led FCC is poised to do with the USF—a regressive, hidden tax on consumers’ phone bills that funds a series of unaccountable, bloated broadband subsidy programs. This stealth tax hike is the quintessential Biden ‘junk fee.’

“Caught in a dilemma of wanting to further expand USF programs, but having already maxed out the level of taxation that American consumers can reasonably tolerate, the conversation at the FCC and in Congress has focused on expanding the pool of companies and products subject to the tax. This approach is anything but fair to American taxpayers: it would hide the problem of excessive USF taxation rather than fix it and ultimately make tax burdens worse by emboldening further unaccountable spending growth. It represents ‘Bidenomics’ at its worst: reform nothing and hide unsustainable spending through inflationary taxes that Americans would never agree to pay directly.

“American taxpayers deserve better. Rather than giving the FCC carte blanche to expand its balance sheet, Congress must reform the USF’s structural problems, re-evaluate its component programs, and get the FCC’s spending under control. In the blueprint that follows, I lay out a plan to do just that.”

Sen. Cruz’s eight principles to guide USF reform include:

  1. Put Congress back in the driver’s seat;
  2. Move social welfare spending on-budget;
  3. Eliminate program duplication;
  4. Stop subsidizing networks that face unsubsidized competition;
  5. Do not subsidize Infrastructure Investment and Jobs Act-funded (IIJA) networks’ ongoing operational costs;
  6. Target low-income subsidies to those who truly need them;
  7. Ensure E-Rate is truly improving education and not aggravating kids’ screen addictions;
  8. Establish better controls to stop waste, fraud, and abuse.

To read a more thorough description of each principle, click HERE.

In the white paper’s conclusion, Sen. Cruz said he will use these principles to develop legislation to reform the USF.

“USF reform involves hard work and hard choices, but Congress and the FCC owe it to American taxpayers to rise to the challenge. While expanding the tax base has been the focus of most USF legislative efforts, the more lasting, meaningful benefits will come from spending reform. Guided by this blueprint—and its principles of fiscal responsibility, administrative accountability, and the rule of law—I look forward to developing legislation to address the USF challenge.”

Read the full white paper HERE