Examiner Editorial: Federal newspaper bailouts would negate the industry

Those immortal words “I’m from the government and I’m here to help you” are now being spoken to newspaper owners and their employees, all of whom are desperate to survive in the Internet age. The main voice behind the words is Sen. Ben Cardin, D-Md., author of legislation that would allow newspaper owners to restructure their properties as 501c(3) education foundations.

The idea is to lure rich donors who will bail out “quality newspapers” if the government will make doing so tax deductible. What will actually happen is newspapers will become government toadies.

Newspapers are the heart of America’s greatest publishing tradition — independent voices eager to expose official wrongdoing, to shine light in dark places, to speak for ordinary people. It’s no exaggeration to say that newspapers were so crucial to public debate that the American Revolution might never have happened without them.

From the republic’s earliest days, newspapers have been the watchdogs of the high and mighty. They’ve held them to account, criticizing their actions and even denigrating them, though usually with good reason. Policy decisions on wars, taxes, tariffs and debts also have been routinely judged, and often even more harshly. John Jay, for example, who was one of the “Publius” trio of authors of the “Federalist Papers,” once complained that he could travel at night by the light of his own burning effigies after signing the Jay Treaty of 1794 with Britain.

If newspapers become tax-exempt foundations, such independence will sooner or later be lost forever. The tax code bars such organizations from taking positions on legislation or endorsing candidates.

Just as think tanks now are routinely threatened with loss of their tax status for getting too close to politics, editors of every political stripe will find themselves at constant risk, forced to weigh the words of their editorials and news stories based on tax consequences rather than accuracy and merit. Even more ominously, the bill extends the offer of tax-free status to newspapers only so long as they remain “necessary or valuable in achieving an educational purpose.” No genius is required to figure out who will define what’s an appropriate educational purpose.

Cardin’s bill also makes exacting demands on newspapers’ operating procedures, should they choose the 501c(3) path. They would have to carry “local, national and international news stories of interest to the general public,” apparently excluding niche and neighborhood publications.

Advertising revenue would remain tax-free only if “the space allotted to all such advertisements in such newspaper does not exceed the space allotted to fulfilling the educational purpose of such qualified newspaper corporations.” But does that include Sunday ad inserts? Do the comics and the crosswords count as “educational”?

When you have to ask such questions about a bill, it’s a bad bill.

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