House Dems Expand Eligibility for $1 Billion in Local News Subsidies

TV stations and midsized papers would be eligible for funds

media newspapers
New York City newspapers / Getty Images
November 4, 2021

House Democrats have expanded a controversial proposal to subsidize local news outlets, offering in the latest version of their massive spending bill payroll tax credits to newspapers and TV broadcasters that employ up to 1,500 journalists.

The provision, included in a version of the Build Back Better Act released Wednesday, would give payroll tax credits of up to $12,500 for each employee at qualifying outlets. A previous version of the bill set the threshold to qualify for the subsidies at 750 employees. That version also did not propose subsidies for TV broadcasters.

Democrats last week stripped the newsroom subsidy from the bill but on Tuesday quietly added it back in. Democratic leaders revised the bill as Republicans and some moderate Democrats balked at the Build Back Better Act's $3.5 trillion price tag. The Joint Committee on Taxation said the initial proposal would cost $1.3 billion over the next decade.

The changed version of the bill would allow some of the country's largest news companies to qualify for the subsidies. The Philadelphia Inquirer, for example, has around 1,000 employees. It is not clear whether local newspapers owned by national publishing companies will qualify for the subsidies.

Republicans have come out against the proposed subsidy, calling it a politically motivated bail out for the Democrat-friendly industry. More than 80 percent of journalists said they were liberal or Democrats, according to one recent study.

"As the Democrats raise taxes and stoke inflation on working families, they're carving out a special tax gift for their friends in the media, which is the propaganda wing of the Democratic Party," Rep. Devin Nunes (R., Calif.), a member of the House Ways & Means Committee, told the Washington Free Beacon in September. "Bureaucrats will obviously exploit this clause to ensure that Democrat-friendly outlets receive this present while conservative outlets are excluded. Anyone who believes this program will be administered in a politically neutral way should have his head examined."

Democrats hope the subsidy will rescue local newspapers, which over the past two decades have seen subscriptions plummet amid a shift to web-based outlets. The number of newspaper employees fell by 57 percent from 2008 to 2020, and more than 1,800 newspapers have gone out of business since 2004.

The proposal comes as public trust in the media is at historic lows. Only 21 percent of Americans said they had "great confidence" in newspapers, according to a recent Gallup survey. Only Congress and big business had lower confidence ratings.

A group of Democratic senators first proposed the newspaper handout earlier this year in a bill called the Local Journalism Sustainability Act. The bill also called for a $250 tax credit to individuals who purchase newspaper subscriptions. The AFL-CIO in September endorsed the act in a letter to Democratic leaders, saying the bailout was needed in order to deal with a so-called information crisis.