NTF Issue Paper: cong62.doc. 3-09.

NEBRASKA TAXPAYERS FOR FREEDOM ISSUE PAPER:

A BAILOUT FOR THE LIBERAL NEWS MEDIA.

BACKGROUND. Liberal Sen. Benjamin Cardin (D.-MD.) introduced S. 763, the Newspaper Revitalization Act, to allow newspapers to morph into non-profit businesses to help them financially survive in this recession and as increasing numbers of Americans obtain news from non-traditional sources like radio talk shows and the Internet. Newspaper profits have plummeted in recent years. Paper advertising revenue dropped by 25% in 2008, according to Barclays Capital. Circulation continues to fall, as sophisticated and younger readers increasingly access alternative news sources. In recent months, many large, liberal daily newspapers have halted publication or become financially unstable, like the Seattle Post-Intelligencer and San Francisco Chronicle. Others, like the Los Angeles Times, have filed for bankruptcy or begun numerous job eliminations.

CARDIN BAILOUT. The Cardin bill would permit newspapers to operate as non-profits, if they selected 501©(3) status as educational entities, like public radio. Such newspapers could not make political endorsements but could report independently on all issues, including political campaigns. All advertising and subscription revenue would become tax exempt, and newspapers could claim as tax deductible all contributions to support news coverage or operations. Cardin declares that Congress must keep these newspapers solvent, as necessary to our 1^st Amendment freedoms. He believes that beleaguered papers could operate like National Public Radio, which accepts federal taxpayer funding but exhibits a noted liberal bias. This bill so far has numerous supporters in the controlled, liberal media but few in Congress. Only Senator Mikulski, the other liberal Maryland senator, has co-sponsored the bill.

CONSERVATIVE OPPOSITION. Conservatives respond that most daily newspapers exhibit extreme liberal bias in both their editorial sections and news reporting. Congress should not force taxpayers to subsidize media sources that continually bash conservative and taxpayer interests and persons. Under non-profit status, the federal government would have more control over newspapers, as it has assumed additional regulation over financial institutions. More examination of newspaper content. More news that is unfair and unbalanced. More slanted news coverage of politics. If thousands of liberal journalists lose their jobs, the American public will receive more unbiased news reporting from alternative sources. Most readers no longer want to peruse the American Pravdas. Since our Constitution and Bill of Rights appeared, the federal government has never held a controlling voice in the media, so this precedent is dangerous to our rights. This subsidy unfairly would compete with free market news sources that depend on the same kind of incoming revenue streams. Taxpayers did not subsidize horses and buggies when cars arrived. Newspapers instead should focus on offering unbiased reporting and enticing content to attract readers. Then they could compete with Internet news sources, cable TV, and blogs that aggressively challenge them. Otherwise, let the controlled paper media join the dinosaur set. The real Cardin motive is that liberals depend on the dinosaur media to cover and endorse their liberal policies. Liberals in government wish to see more newspapers on their side, with privileges granted for acquiescence and support.

The bill is constitutionally suspect, a litigation attorney dream. It rewards the very businesses that have ignored innovation in the news industry as their anachronistic existence collapsed around them. In awarding tax advantages to declining businesses, the bill not only helps losers but makes them winners. The innovative should not face unfair competition from those who hold onto a dying business model. Newspapers could accept tax-advantaged donations from companies and individuals. Such generosity might win them favorable news coverage. With tax exempt status, the costs of creating, publishing, and distributing a paper cannot become accomplished with a 50% ad limit, unless that medium is very efficient in raising charitable contributions. No definitions in the text of what constitutes interest to the general public or accountability. No other government bailouts have resuscitated industries; this one would appear identical.

TAKE ACTION NOW. Contact your senators today to vote down S. 763, if it reaches the Senate floor for debate (see reverse side for Capitol Hill contact information). The media is supposed to act as a government watchdog, not the reverse.

Research and documentation for this issue paper done by Nebraska Taxpayers for Freedom. This material copyrighted and notarized by Nebraska Taxpayers for Freedom, with express prior permission for its use by Citizens for Local Control, Cherry County Taxpayers, Dawes County Taxpayers, and other groups in the Tax Freedom Network. 3-09. C