Why feds can’t – and shouldn’t – rescue press
Apart from whatever modest cathartic effect it may have provided participants and observers, the qvetch-in over the fate of the newspaper industry hosted by Sen. John Kerry was pointless.
Two days before the opening gavel struck Wednesday at the hearing called by the failed Democratic presidential candidate from Massachusetts, the outcome was presaged by White House spokesman Robert Gibbs, who observed succinctly: “I don't know what, in all honesty, government can do about it."
Gibbs is dead right. Government can’t, and shouldn’t, do anything about the stupendous – and lamentable – reversal of fortune that has scourged newsrooms, squeezed newsholes and shuttered such proud titles as the Rocky Mountain News and Seattle Post-Intelligencer.
There is no persuasive economic argument for the feds to bail out faltering newspapers in the same way they acted to shore up AIG, several banks, Fannie Mae and two of the three domestic automakers.
In the case of the financial institutions, government aid materialized because they were deemed, not withstanding their prior reckless behavior, to be essential to the over-all well being of the nation, given their power to fund economic activity ranging from business expansion to home mortgages.
In the admittedly less compelling case of the Motown duo, the argument for government support is that tens, and maybe hundreds, of thousands of jobs would be saved by enabling the companies to stumble along until the earlier of two outcomes: (a) they miraculously figure how to make cars people want to buy or (b) the economy is strong enough to absorb the workers displaced when the companies implode.
As previously discussed here in some detail, no similar argument can be made for newspapers, which collectively employ a mere 0.2% of the nation’s labor force and generate only 0.36% of the gross national product. In other words, newspapers, from an economic point of view, are not too big to be allowed to fail.
Apart from any other reason you could muster for federally funding hard-up publishers, there is the matter of how any handout could be reconciled with the First Amendment.
Grants, loans or other federal goodies properly would require oversight by the government and accountability on the part of the publishers. In that event, there would be no imaginable safeguard to keep politicians and government bureaucrats from gnawing away at the freedom of the press.
As chilling proof, look no further than the way the Bush administration not so long ago terrorized and politicized the Corporation for Public Broadcasting, which dispenses government-allocated funds to National Public Radio and the Public Broadcasting System.
Another clear and present danger to the separation of government from the press is inherent in the non-starter legislation proposed by Sen. Benjamin Cardin (D-MD) that would confer certain tax advantages on newspapers electing to be organized as non-profit organizations.
The catch in Cardin’s legislation is that non-profit papers would be prohibited from making political endorsements. But the provision is unenforceable, as well as unconstitutional.
While a newspaper could avoid saying “we endorse Senator X,” what would happen if it published a series of stories exposing fund-raising shenanigans by his opponent or a columnist excoriated the opponent day after day for everything from marital infidelity to bad breath?
Could a series of news articles or commentaries be construed as improperly favoring one candidate over another? Who would make the judgment— a senate committee, a federal bureaucrat or someone else?
Beyond those issues, Cardin’s bill fails to face up to the fundamental problem that threatens the financial viability of many newspapers: Advertising revenues are plunging faster than publishers can trim their considerable, fixed operating expenses.
If a newspaper is losing more money than it makes, changing its corporate structure won’t suddenly fix its problems. As demonstrated by the financial challenges faced by the St. Petersburg Times and the Christian Science Monitor, non-profit ownership won’t shield a paper from the harsh laws of economics.
Thanks but no thanks, Uncle Sam. Saving newspapers is a problem that has to be solved by publishers themselves.