Should Obama Bail Out the Newspapers?

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As America's newspapers continue to seek the bottom of the advertising abyss, Obama told reporters that he is "happy to look at" bills that would give newspapers tax breaks if they became non-profits. Atlantic alum Conor Clarke unpacked his thoughts on newspaper subsidies with great eloquence here. His point was pretty straightforward: News isn't just any good (like Snuggies). It's a public good (like vaccines). We subsidize plenty of public goods (like vaccines), so why not subsidize the news, too?

The Atlantic's newest member Michael Kinsley responded:


Trouble is, I don't think it's a legitimate purpose of government to try to affect what you read. Preventing you from reading something (censorship) is obviously worse than causing you to read something (via subsidy), but the latter is still troublesome. In fact, it may even be unconstitutional. Who decides what communication/speech gets subsidized? If the Times gets a subsidy, does the Daily Worker? It smacks of an "establishment" of speech analogous to the establishment of religion.

But this new bill steps around the sticky question of "choosing" organizations to subsidize by simply offering privileged status to non-profit newspapers. They would get tax breaks and could receive tax deductible donations like a charity. The New York Times, as it stands, would not get a subsidy, because it's a for-profit company. The Daily Worker would get a tax breaks, but only if restructured.

Here's a description of the bill from Sen. Benjamin Cardin (D-MD):

The Newspaper Revitalization Act would allow newspapers to operate as non-profits, if they choose, under 501(c)(3) status for educational purposes, similar to public broadcasting. Under this arrangement, newspapers would not be allowed to make political endorsements, but would be allowed to freely report on all issues, including political campaigns. Advertising and subscription revenue would be tax exempt and contributions to support coverage or operations could be tax deductible.

That could be a big deal. But why only newspapers? It's unclear to me why non-newspaper news organizations shouldn't also benefit from the bill. Perhaps this is a matter of pure bias, because I work for a news company that is not a newspaper. But if newspapers qualify as "educational" non-profits, why shouldn't other media count?

Also, what if the company that owns this blog, the Atlantic Media Company, or any company, bought a small newspaper and turned into a non-profit. Would we qualify under this bill, even though we're mostly a magazine company? The law says "newspapers" would qualify if...

the trade or business of such corporation or organization consists of publishing on a regular basis a newspaper for general circulation.

That sounds like yes. I wonder if a bill like this would push more struggling media companies into newspaper-ownership to qualify for this bill, or whether companies would be tempted to extend tax exempt advertising and deductible contributions to all their news outlets, not just the newspapers they own.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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