FTC Staff Discussion Draft on Saving Journalism – Bravo Performance 2

Yesterday's column included a rousing defense of the FTC staff's performance against the slings and arrows of outraged bloggers and a summary of the “Change In Law” portion of possible policies suggested by the discussion draft on reinventing journalism.

Today we start with governmental support for journalism, which isn't all that new – consider the subsidies built into  postal rates, the guaranteed business from legal notice publication requirements, the tax break from allowing current deduction of funds spent promoting circulation – a capital expense, and the history of direct financial support for the Corporation for Public Broadcasting which, in turn supports the performance of  NPR and PBS, both of which include journalism in the content they deliver.

Possible policies include: 1) expanding the scope of performance at Americorps (feds place young in jobs at non-profits) with a journalism division; 2)  increase funding for PBS and NPR so they can develop strong local newsrooms – maybe, but what happens if those strong local newsrooms do their job and report news the pols don't want to hear, does National Endowment for the Arts and culture war ring any bells here, only now that war could be totally partisan and endless;  3)establish a national fund for local news – see above re culture war;  4) provide news organizations with a tax credit for every journalist employed; 5) establish citizen news voucher – basically a tax dollar allocation system – when you file your tax return you can designate a donation, up to, say,  $200 to the nonprofit news organization of your choice, so that the taxpayers pick which news organizations  get fed money rather than the pols – a little better than culture wars, but it still smells of the same problem and ties into the big 501(c)(3) issue, see below; 6) fund real reporting performance  by student journalists;  7) allow nonprofit news orgs to take down Small Business loans; 8) use Voice of America material domestically – hmm, why waste that valuable propaganda on foreigners when you can indoctrinate your own citizens, Adolf and Chairman Mao would love this one, sure Voice of America does some quality work, but the incentive for pols to meddle with, and argue about, VofA content will create a whole new ball game if it's used domestically, 9) increase postal subsidies. 

How could we pay for all this stuff?  The staff says consider: 1) charging tv and radio broadcasters for electro-magnetic  spectrum use; 2) tax on consumer electronics; 3) tax on sales of that portion of the EM spectrum now auctioned for commercial use; 4) sales tax on advertising; 5) ISP- cell phone tax.

Now the fun begins.  Can a news organization be a 501(c)(3), which gives its “investors” the magic of the tax deduction.  Right now, it's not all that clear.  501(c)(3)s are limited to specified purposes, which include educational, scientific and literary, but not journalistic.  Specialty journals can often squeeze into the educational niche, but for a general periodical, 501(c)(3) is no safe haven.  News organizations that endorse candidates or editorialize on political issues almost certainly do not qualify, since 501(c)(3)s must refrain from political campaigning and lobbying. 

After preliminary thought on this preliminary policy, I would create a new tax exempt category for nonprofit news organizations, call it  501(c)(3-J).   The new category would define a news organization so as to require significant news gathering (perhaps defined by ratio of news gathering expense to total expense), not just disseminating, but no restriction on political activity – because I don't mind a journalist with an ax to grind, even a crazy ax, and I don't want to try to draw any fine lines on what political activity qualifies and what does not, because that is not something I trust the IRS to enforce.  This approach would boost the news gathering dinosaurs before they go extinct, while not exactly punishing the aggregators and the rebroadcasters.  Deductions reduce revenue and we will pay for this somehow, somewhere, but the deduction approach gives the pols little control, which is critical if you are going to let the tax exempt news media engage in politics.

 Photo Credit: cliff1066