Inside the massive spending bill being pushed by Democrats on Capitol Hill is a proposal that would carve out $1.3 billion in tax credits for local newspapers with up to 750 employees.The proposal would allow a payroll tax credit for journalists of up to $12,500 in wages per employee per quarter or equal to 50 percent of the salary of each journalist, up to $50,000 per journalist annually. Under the proposal, if advertising is slow, the federal government will also provide newspapers tax credits to keep the company afloat.
Media outlets are lining up in support of the legislation.
The National Association of Broadcasters (NAB) has been lobbying Congress to pass this bailout proposal through budget reconciliation.
Report for America has also advocated for the federal government to spend $500 million for public service ads to be run by local news operations.
The idea of bailing out newspapers isn’t new.
In 2020, news organizations had already started to ask Congress for financial support and many newsgroups raked in millions of dollars through the Paycheck Protection Program (PPP) during the pandemic.
In July, Democrats in the U.S. Senate introduced the “Local Journalism Sustainability Act” which would give millions to help local newspapers in financial distress.
“If newspapers are hurting so bad, then why not set up a GoFundMe account or do what National Public Broadcasting (NPR) does and hold fundraising events instead of asking the federal government for a bailout?” said Adam Andrzejewski, the CEO and founder of OpenTheBooks.com and a senior policy contributor to Forbes.com
Details of the proposed bailout also show that only news publications would receive federal money, not broadcasters.
“Could you imagine the anger and sparks that would fly if Republicans and conservatives tried to pass a special tax credit for only radio talk show hosts?” pointed out Roger Henderson, a radio host of WBOB in Jacksonville.
Henderson added that tax dollars could be going to support reporting that taxpayers might not agree with.
Lee County Property Appraiser Matt Caldwell, who is now a commentator on Southwest Florida Fox Radio News affiliate WFSX, said if the government bails out local newspapers, questions of ethics will arise, including if journalists can properly cover elected officials who favored the proposal.
Newspaper employment is down about 50 percent from its 2008 levels.
Last year, in an op-ed, Politico’s senior media writer Jack Shafer pointed out that newspapers were using the pandemic as an excuse on why advertising and readership were down as they hoped to receive federal funding.
“It’s quite another thing to fling a lifebuoy to a drowning swimmer who doesn’t have the strength to hold on. Newspapers are such a drowning industry. Readers have abandoned them in the tens of millions. Advertisers have largely abandoned them. For the most part, the virus isn’t causing them to sink. They’re already sunk. some sectors must be left dead unless we want to make permanent welfare cases out of them,” wrote Shafer.
In the op-ed, Shafer went after the Corporation for Public Broadcasting (CPB) which receives government funding.
“CPB is governed by political appointees and the top executives are former political operatives, not media people. Their jobs are contingent on continued funding from Congress and that creates a disincentive to provide funding for anything controversial,” Shafer wrote.
Not all newspapers are failing. Publications like the Wall Street Journal and the New York Times have added millions of online subscribers and the Washington Post has more than a million digital subscribers.
Some experts have noted that many newspapers were already in financial trouble even before the pandemic.