"The reality is this: Adjusting for inflation, the Lifeline program is over 23 times as large today as it was at the end of the Reagan administration," he said. "To equate the two is like saying that The Godfather: Part II is the same as Paul Blart: Mall Cop 2 because both are movie sequels."
Republican Commissioner Michael O'Rielly argued that the Democrats are trying to spend as much money as possible before the end of Obama's term.
The Lifeline program, which is currently about $1.7 billion, is funded through "universal-service" fees on consumers' monthly phone bills.
The commission voted to seek comment on its proposal, but it will need to vote again in several months to finalize the changes.
In addition to covering Internet access, the agency's proposal includes measures aimed at cracking down on abuse of the program. For example, phone companies, which get more funding for enrolling more people, would no longer be in charge of verifying that someone is eligible for the program. The agency also asks for comment on whether to cap the size of the program.
So consumers would be allowed to spend their $9.25 monthly subsidy on voice, mobile data, or home Internet access, but the size of that subsidy might not actually increase under the proposal.
"No one is more outraged at some of the absurdities and some of the actions that have occured in the marketplace by unscrupulous people," Wheeler said, arguing that changes made to the program by the George W. Bush-era FCC are primarily to blame for the explosion in fraud.
Although the Republicans said they are open to considering covering Internet service, they argued that the proposal doesn't go far enough to protect the public's money.
"Despite some positive aspects to parts of this item, the commission's main proposal would take us in the wrong direction," Pai said. "It would expand a broken program. It would waste even more money. And it would raise taxes on the American people."
Commissioner Mignon Clyburn, a Democrat and fierce advocate for Lifeline, acknowledged that the program has become a political powder keg.
"The safe course would be one of inaction. But the oath I took requires that I try and use all the tools in my arsenal to close chronic divides and stay true to those words in the statute," she said. "We must not wait, remain idle, or play it safe when it comes to this program, for we know that broadband is the greatest technology equalizer of our time, but it can only be so, if everyone has access. If we fail or never try, the promises that broadband brings will be reserved only for the privileged."