Failed Liberal Newspapers Earn Boot, Not Bailout

When last week's employment report came in a tad better than expected, it sent a chill through the hearts of Washington's Democrats.

If the recession ends, then the bailout frenzy will end, and it will be much harder to hand out taxpayers' cash to political allies. With time running out on the crisis atmosphere, our hard-working public servants put in overtime last week to introduce to the public the next bailout candidate: the liberal newspapers.

Former Los Angeles Times columnist Rosa Brooks captured the mood well in her final column before joining the Obama administration. "It's time for a government bailout of journalism," she wrote, citing such possible steps as tax credits for newspaper subscriptions and more funding for public broadcasting. The parent company of the Times, by the way, is already in bankruptcy.

Senator John Kerry, Democrat of Massachusetts, held hearings last week to lay the foundation for a newspaper bailout. He is anxious about the fate of the Boston Globe, which is projected to lose $85 million this year, and he has argued for relaxing antitrust legislation that limits ownership of local media outlets.

Such a relaxation might allow for substantial consolidation in the news industry, which would, not insignificantly, advantage newspaper owners vis-à-vis their workers.

It seems to be acceptable in Democratic circles for an employer to take a hard line against workers, so long as that employer serves the greater political good. Which explains why nobody was dragged before an angry panel when the New York Times Co., owner of the Globe, walloped workers there.

"Corporate Hardball"

Howard Kurtz of the Washington Post described the company's actions thusly: "In a striking example of corporate hardball, the New York Times Co. has threatened to shut down one of its journalistic jewels, the Boston Globe, unless the New England paper's unions agree to sweeping concessions."

To save the newspaper, the Globe's largest union will have to accept a deal that includes an 8.4 percent pay cut and other concessions, the Globe reported on May 8. The union will vote next month.

Relaxing antitrust rules, as Kerry supports, would only increase the bargaining power of the largest media owners.

This recession has hit the newspaper industry hard. The New York Times Co., which owns the Times, the Globe, the International Herald Tribune and 15 other newspapers, had a net loss of $74.5 million, or 52 cents per share, during the first quarter of 2009, and experienced an advertising revenue decline of almost $124 million.

Relaxing antitrust rules would only increase the bargaining power of the largest media owners.

The Rocky Mountain News and Seattle Post-Intelligencer both closed this year. These newspapers were among the top 100 in newspaper circulation in 2007, and had combined daily readership of almost 400,000.

Bankruptcies and Layoffs

The companies that own the Los Angeles Times, Chicago Tribune, Chicago Sun-Times, Philadelphia Inquirer, Minneapolis Star-Tribune and Philadelphia Daily News have all filed for bankruptcy. Newspapers that aren't closing their doors are making steep budget cuts. Almost 9,000 newspaper jobs have been eliminated in 2009, according to a Web site that is keeping track.

Interestingly, the news isn't bad everywhere. In a pattern that is reminiscent of Fox News' climb to television dominance, circulation for the right-leaning Wall Street Journal increased last year.

The Internet and proliferation of new media have provided enormous economic challenges to the old model of the local paper, but some firms continue to thrive nonetheless, firms that adhere to the highest journalistic standards. That suggests there is a political force that explains the bailout urgency of Democrats. They don't want to lose their mouthpieces.

Media for Obama

An October 2008 poll by the Pew Research Center for the People and the Press found that, by a margin of 70 percent to 9 percent, American voters "overwhelmingly believe that the media wants Barack Obama to win the presidential election."

With numbers that lopsided, is it any wonder that newspaper subscriptions are waning? How can you trust a news source that has established bias so convincingly?

If the Democrats succeed in passing a bailout package for newspapers, the potential for political harm will be unbounded.

Think about it: Creditors of Chrysler LLC that have participated in the government's bailout of banks played along with the Obama administration's attempt to use bankruptcy to provide a lucrative deal to organized labor. Creditors outside the bailout program, by contrast, recognized the raw deal they were being offered.

A news bailout would create a set of newspapers that are even more beholden to the Democrats than they have been in the past. We would adopt the Pravda model of journalism.

Supporters of a newspaper bailout argue that unbiased and professional journalism is necessary for the success of our democracy. On that, they are correct. But bailing out the firms that are currently struggling will do nothing to advance truth and freedom.

Sometimes, no news is good news.

Kevin A. Hassett is a senior fellow and the director of economic policy studies at AEI.

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About the Author

 

Kevin A.
Hassett
  • Kevin A. Hassett is the State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute (AEI). He is also a resident scholar and AEI's director of economic policy studies.



    Before joining AEI, Hassett was a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at Columbia (University) Business School. He served as a policy consultant to the US Department of the Treasury during the George H. W. Bush and Bill Clinton administrations.

    Hassett has also been an economic adviser to presidential candidates since 2000, when he became the chief economic adviser to Senator John McCain during that year's presidential primaries. He served as an economic adviser to the George W. Bush 2004 presidential campaign, a senior economic adviser to the McCain 2008 presidential campaign, and an economic adviser to the Mitt Romney 2012 presidential campaign.

    Hassett is the author or editor of many books, among them "Rethinking Competitiveness" (2012), "Toward Fundamental Tax Reform" (2005), "Bubbleology: The New Science of Stock Market Winners and Losers" (2002), and "Inequality and Tax Policy" (2001). He is also a columnist for National Review and has written for Bloomberg.

    Hassett frequently appears on Bloomberg radio and TV, CNBC, CNN, Fox News Channel, NPR, and "PBS NewsHour," among others. He is also often quoted by, and his opinion pieces have been published in, the Los Angeles Times, The New York Times, The Wall Street Journal, and The Washington Post.

    Hassett has a Ph.D. in economics from the University of Pennsylvania and a B.A. in economics from Swarthmore College.

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    Email: khassett@aei.org
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