The newspaper business has been in a bad way for years. Can taxpayer bailouts cure what ails it?
Quite a few lawmakers appear to think so. Tucked into the massive spending and tax legislation currently before Congress is a trio of tax subsidies, collectively dubbed the Local Journalism Sustainability Act. Sponsored by more than 70 senators and representatives from both parties, they are intended to give a financial boost to local newspapers and other media outlets.
One of the tax breaks is a credit of up to $5,000 for businesses that advertise in a local paper. A second would let individuals who pay for a newspaper subscription lop as much as $250 from their tax bill. The third and most lucrative would give publishers a hefty tax break for each journalist on their payroll. The credit, worth $25,000 in the first year and $15,000 annually thereafter, would be refundable, meaning that a publisher who owed less in taxes than the credit was worth would receive the difference from the Internal Revenue Service in the form of a refund check.
Quite a few voices have been raised in support of government aid to local news media. Rebuild Local News, a coalition representing 3,000 local newsrooms and journalism organizations, has strongly endorsed the measure. The AFL-CIO, a federation of 56 labor unions, backs the subsidies on the grounds that they will “enable communities across the country to provide more and better news coverage.” In a letter this month, the attorneys general of 13 states, the District of Columbia, and Guam endorsed the legislation. So have the editorial boards of newspapers large and small.
I respectfully dissent.
I have been working for newspapers for 34 years, so the troubled state of the news industry is not a subject I take lightly. Nor do I discount the indispensability of journalism, with all its flaws and blind spots, to the functioning of a democratic civil society. But I am also aware that the news media is now among the least trusted institutions in society — not quite as reviled as Congress, but close — and government subsidies will only add to the skepticism with which many Americans regard the media.
The case for most government subsidies is that the industry they promote generates some important public benefit — a benefit that would be jeopardized if matters were left up to the marketplace. I have never found that a persuasive claim and over the years have opposed targeting tax credits to many politically wired special pleaders, including biotech firms, video game makers, arts organizations, convention centers, higher education, movie and theater producers, Fortune 500 corporations, and public broadcasting. When government singles out an industry for lucrative special treatment, I have contended, it frequently worsens the problem it set out to solve or squanders money to no good effect. It would smack of hypocrisy for me to abandon that standard when it comes to the industry I happen to work in.
Subsidies nearly always amount to confiscating money from the many in order to redistribute it to the few. Those who advocate funneling funds to local newspapers via tax breaks for publishers, advertisers, and subscribers are really saying that if people won’t support local journalism voluntarily, the government should make them do so involuntarily by manipulating the tax code. If you ask me, every family ought to subscribe to one or two newspapers and read them faithfully. Others might feel just as strongly about the importance of music lessons, sending kids to summer camp, filling a house with books, or mastering a foreign language. They’re all worthy activities. But that’s no justification for propping them up with tax breaks.
Yes, the American system of democratic self-government is strengthened by honest and diligent journalism. But government subsidies, almost by definition, are antithetical to the spirit of an independent press and the First Amendment. A newspaper that takes money from the government is apt to pull its punches when it covers that government — especially if it grows addicted to tax breaks that will have to be renewed every few years.
The sums involved aren’t trivial. The executive director of the Lenfest Institute, which owns The Philadelphia Inquirer, told The Washington Post that a midsized regional news outlet employing 50 journalists could expect to clear roughly $1 million a year in government subsidies under the proposed legislation. With that much largesse at stake, the integrity of newsrooms will be put to the test. “A government that props up the media,” Reason magazine’s Peter Suderman has written, “inevitably leads to a media that props up the government.” If keeping the subsidy spigot open means staying on good terms with certain politicians, how likely will the paper be to cover stories the politicians don’t want covered?
Making that concern even more acute are the terms of the Local Journalism Sustainability Act, which empowers the government to decide what and who qualify as legitimate news outlets and journalists. The bill specifies, for example, that to be eligible for government money, a publication must “primarily” serve “the needs of a regional or local community” and its “primary content” must come from “original” sources. You don’t have to be a lawyer to perceive that such language gives the IRS an incredible amount of leeway to determine whether a publication is entitled to those tax write-offs. That would be cause for concern at any time; in our era of intense, hyper-polarized political animosity, when administrations of each party have demonized and harassed their critics, it is almost certainly a prescription for less journalistic autonomy.
There’s no disputing that traditional news outlets are in dire straits. Since 2004, one-fourth of the nation’s newspapers, 2,100 of them, have gone out of business. Over the course of my career, weekday newspaper circulation has fallen from more than 60 million to less than 25 million — including online readers. At its peak in 2005, annual newspaper advertising revenue totaled nearly $50 billion. Last year it came to a mere $8.8 billion.
The ills of the news business are all too real, many of them caused by technological and social changes that no tax breaks can undo. That journalism will endure, I have no doubt. The customary forms of journalism, on the other hand, may well be nearing their end. What the future holds for local newspapers, no one can say for sure. But this much, at least, should be clear: The press can be free or it can rely on government handouts. Not both.