By Dean Baker
December 19, 2024
Source: Center for Economic and Policy Research
Virtually everyone, except Elon Musk, agrees that the rich have too much political power these days. When a single individual can put tens or even hundreds of millions of dollars behind their favored candidate, it seriously distorts democracy. Unfortunately, there are few serious strategies for addressing this problem.
Given the Supreme Court’s ruling in Citizen’s United, as well as prior rulings saying effectively that money is speech, there is little prospect for any sort of limits on campaign spending, at least until we have a very different Supreme Court. While this is bad news for fans of democracy, the problem is even worse.
People have generally viewed the media and political campaigns as two distinct buckets. Most attention has been focused on the second bucket. But the first bucket (including social media), is at least as important in determining political attitudes.
While this should be obvious in the age of Fox News, for some reason many people seem to be under the impression that we will have limited the political power of the rich if we restrict their campaign spending. This is a bizarre view when the rich would still have the option to buy every major media outlet and social media platform and turn them all into Fox News. Given Elon Musk’s takeover of Twitter, and Donald Trump’s very explicit threats against critical media, this story should not seem far-fetched.
To be clear, there is still much useful reporting done by leading media outlets like the New York Times and CNN. But these outlets will likely take threats of major lawsuits and other reprisals seriously. And recalcitrant outlets can always be taken over by Elon Musk.
If progressives are going to have the ability to challenge the political power of the billionaire MAGA gang, we need another mechanism for supporting media. And this has to go well beyond urging people to support progressive outlets and their local newspapers. Such individual efforts are great, but we need a public channel of funding to supplement current sources.
Public Funding Through Individual Tax Credits
To my mind, the best way to set up a new channel to support the media is with public funding through a modest-sized individual tax credit of say $100. This tax credit would be fully refundable and available to every adult to support the news outlet of their choice.
There are two reasons for making it an individual tax credit, rather than just a direct subsidy of existing newspapers and other media. The first is that traditional media is viewed with enormous suspicion by much of the public. It would likely be far more difficult to gain political support for subsidies designated for the media that currently exists.
The second and more important reason is that people should be able to decide what newspapers or news outlets they want to support. If they make this choice themselves, they will be more invested in it and will be more likely to appreciate the outlets they choose to support.
Also, it is likely that many new outlets will spring up to take advantage of this new source of support. Some of these will undoubtedly be low quality and provide little real news, but this is true of many news outlets currently. If people choose to use their tax credit on them, that would be their choice, as it now when they opt to buy a supermarket tabloid or to watch Fox News. But there would also be a substantial pot of money available to support serious news outlets that provide real information about what is going on in the city, state, or country.
Another benefit of going this route is that it can be done at the state or even local level. There is little prospect that a MAGA Congress would pass legislation that could challenge billionaire power, but there are a number of states, including large states like California, New York, and Illinois, where Democrats have a trifecta. It would be possible in principle to pass a journalism or media tax credit in these states. And if it proved successful, the idea would likely spread.
The Charitable Contribution Tax Deduction: A Model for the Journalism Tax Credit
The tax deduction for charitable contributions provides a good model for how a journalism tax credit could work. With the charitable contribution tax deduction, organizations file with the I.R.S. to be eligible for tax-exempt status. To get eligibility an organization just has to tell the I.R.S. what it does, for example it’s an educational institution or a church. The I.R.S. doesn’t try to determine whether the organization does a good job as an educational institution or a church, that’s for individual donors to do. The I.R.S. just ensures that the organization does what it claims to do.
It would be the same story with an organization applying to be eligible to get a journalism tax credit. They just have to say what type of reporting they are doing and where their work is available. The oversight agency will not try to determine the quality of the journalism, that decision is for the individual contributors.
Also, a requirement of getting the funding is that all the supported work be freely available on the web with no paywall. The logic is that the public paid for the work, it should be able to benefit from it. This would not prevent a newspaper from having some material behind a paywall, if it supported the work from other sources, such as subscriptions or advertising.
A major difference with the tax deduction is that it would be equally available to everyone. Only around 10 percent of the public takes the charitable deduction tax credit. The vast majority of taxpayers take the standard deduction, which means they can’t write off charitable deductions against their taxable income. Also, the deduction is worth much more to a high-income person in the 35 percent bracket than to a middle-income person in the 12 percent tax bracket. This credit would be $100 for everyone, or whatever sum is agreed upon.
Will This Tax Credit Challenge Elon Musk’s Money?
The short answer to that is not right away. Even if we could get one or two progressive cities or states to create this sort of tax credit in the near future, it will take some years to get it up and running. And even then, the size of the credits in a small number of states or cities will be a drop in the bucket compared to the money at the disposal of Musk and his billionaire buddies.
But if a journalism tax credit proves popular, it can expand over time with more states and cities adopting it. If we got to the point where most of the blue states had this sort of credit in place, we could perhaps see 60 or 70 million people kicking in $100 a head to support media they liked. That would come to $6-$7 billion a year.
While much of this journalism would not be especially political (papers report on sports, weather, and civic events) if just a third went to progressive reporting, or just solid investigative reporting, it could make a huge difference in the public’s awareness. And remember, even if the news outlets are only in blue states, everything is going up on the web, where everyone in the country and world can see it. If a newspaper in Minnesota reports that Donald Trump Jr. is selling off the Grand Canyon to buy himself another mansion, even people in Florida and Texas will be able to read the stories.
It is still not fair that the Elon Musks of the world have such an outsize voice in political debates, but as a practical matter we have no way to limit their political spending in the foreseeable future. The best we can hope to do is to build up alternative voices so we don’t just hear from the billionaires and their lackeys.
We also should do something to downsize the huge social media platforms that give their owners so much power. This was a noticeable problem to anyone paying attention even before Elon Musk bought Twitter.
This story may not be satisfying to people seeing billionaires openly flaunting their money to make politicians grant their wishes, but we don’t have a better alternative. It’s great to say that we shouldn’t have billionaires or that we need a big wealth tax, but those statements have as much political impact as watching kids cartoons. We have to start building an institutional structure that can support long-term progressive opposition and a big part of that is having media outlets that the billionaires can’t buy or intimidate into acquiescence.
Dean Bake is co-director of the Center for Economic and Policy Research in Washington, DC. Dean previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He has also worked as a consultant for the World Bank, the Joint Economic Committee of the U.S. Congress, and the OECD's Trade Union Advisory Council.
Virtually everyone, except Elon Musk, agrees that the rich have too much political power these days. When a single individual can put tens or even hundreds of millions of dollars behind their favored candidate, it seriously distorts democracy. Unfortunately, there are few serious strategies for addressing this problem.
Given the Supreme Court’s ruling in Citizen’s United, as well as prior rulings saying effectively that money is speech, there is little prospect for any sort of limits on campaign spending, at least until we have a very different Supreme Court. While this is bad news for fans of democracy, the problem is even worse.
People have generally viewed the media and political campaigns as two distinct buckets. Most attention has been focused on the second bucket. But the first bucket (including social media), is at least as important in determining political attitudes.
While this should be obvious in the age of Fox News, for some reason many people seem to be under the impression that we will have limited the political power of the rich if we restrict their campaign spending. This is a bizarre view when the rich would still have the option to buy every major media outlet and social media platform and turn them all into Fox News. Given Elon Musk’s takeover of Twitter, and Donald Trump’s very explicit threats against critical media, this story should not seem far-fetched.
To be clear, there is still much useful reporting done by leading media outlets like the New York Times and CNN. But these outlets will likely take threats of major lawsuits and other reprisals seriously. And recalcitrant outlets can always be taken over by Elon Musk.
If progressives are going to have the ability to challenge the political power of the billionaire MAGA gang, we need another mechanism for supporting media. And this has to go well beyond urging people to support progressive outlets and their local newspapers. Such individual efforts are great, but we need a public channel of funding to supplement current sources.
Public Funding Through Individual Tax Credits
To my mind, the best way to set up a new channel to support the media is with public funding through a modest-sized individual tax credit of say $100. This tax credit would be fully refundable and available to every adult to support the news outlet of their choice.
There are two reasons for making it an individual tax credit, rather than just a direct subsidy of existing newspapers and other media. The first is that traditional media is viewed with enormous suspicion by much of the public. It would likely be far more difficult to gain political support for subsidies designated for the media that currently exists.
The second and more important reason is that people should be able to decide what newspapers or news outlets they want to support. If they make this choice themselves, they will be more invested in it and will be more likely to appreciate the outlets they choose to support.
Also, it is likely that many new outlets will spring up to take advantage of this new source of support. Some of these will undoubtedly be low quality and provide little real news, but this is true of many news outlets currently. If people choose to use their tax credit on them, that would be their choice, as it now when they opt to buy a supermarket tabloid or to watch Fox News. But there would also be a substantial pot of money available to support serious news outlets that provide real information about what is going on in the city, state, or country.
Another benefit of going this route is that it can be done at the state or even local level. There is little prospect that a MAGA Congress would pass legislation that could challenge billionaire power, but there are a number of states, including large states like California, New York, and Illinois, where Democrats have a trifecta. It would be possible in principle to pass a journalism or media tax credit in these states. And if it proved successful, the idea would likely spread.
The Charitable Contribution Tax Deduction: A Model for the Journalism Tax Credit
The tax deduction for charitable contributions provides a good model for how a journalism tax credit could work. With the charitable contribution tax deduction, organizations file with the I.R.S. to be eligible for tax-exempt status. To get eligibility an organization just has to tell the I.R.S. what it does, for example it’s an educational institution or a church. The I.R.S. doesn’t try to determine whether the organization does a good job as an educational institution or a church, that’s for individual donors to do. The I.R.S. just ensures that the organization does what it claims to do.
It would be the same story with an organization applying to be eligible to get a journalism tax credit. They just have to say what type of reporting they are doing and where their work is available. The oversight agency will not try to determine the quality of the journalism, that decision is for the individual contributors.
Also, a requirement of getting the funding is that all the supported work be freely available on the web with no paywall. The logic is that the public paid for the work, it should be able to benefit from it. This would not prevent a newspaper from having some material behind a paywall, if it supported the work from other sources, such as subscriptions or advertising.
A major difference with the tax deduction is that it would be equally available to everyone. Only around 10 percent of the public takes the charitable deduction tax credit. The vast majority of taxpayers take the standard deduction, which means they can’t write off charitable deductions against their taxable income. Also, the deduction is worth much more to a high-income person in the 35 percent bracket than to a middle-income person in the 12 percent tax bracket. This credit would be $100 for everyone, or whatever sum is agreed upon.
Will This Tax Credit Challenge Elon Musk’s Money?
The short answer to that is not right away. Even if we could get one or two progressive cities or states to create this sort of tax credit in the near future, it will take some years to get it up and running. And even then, the size of the credits in a small number of states or cities will be a drop in the bucket compared to the money at the disposal of Musk and his billionaire buddies.
But if a journalism tax credit proves popular, it can expand over time with more states and cities adopting it. If we got to the point where most of the blue states had this sort of credit in place, we could perhaps see 60 or 70 million people kicking in $100 a head to support media they liked. That would come to $6-$7 billion a year.
While much of this journalism would not be especially political (papers report on sports, weather, and civic events) if just a third went to progressive reporting, or just solid investigative reporting, it could make a huge difference in the public’s awareness. And remember, even if the news outlets are only in blue states, everything is going up on the web, where everyone in the country and world can see it. If a newspaper in Minnesota reports that Donald Trump Jr. is selling off the Grand Canyon to buy himself another mansion, even people in Florida and Texas will be able to read the stories.
It is still not fair that the Elon Musks of the world have such an outsize voice in political debates, but as a practical matter we have no way to limit their political spending in the foreseeable future. The best we can hope to do is to build up alternative voices so we don’t just hear from the billionaires and their lackeys.
We also should do something to downsize the huge social media platforms that give their owners so much power. This was a noticeable problem to anyone paying attention even before Elon Musk bought Twitter.
This story may not be satisfying to people seeing billionaires openly flaunting their money to make politicians grant their wishes, but we don’t have a better alternative. It’s great to say that we shouldn’t have billionaires or that we need a big wealth tax, but those statements have as much political impact as watching kids cartoons. We have to start building an institutional structure that can support long-term progressive opposition and a big part of that is having media outlets that the billionaires can’t buy or intimidate into acquiescence.
Dean Bake is co-director of the Center for Economic and Policy Research in Washington, DC. Dean previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He has also worked as a consultant for the World Bank, the Joint Economic Committee of the U.S. Congress, and the OECD's Trade Union Advisory Council.
No comments:
Post a Comment