[Congressional Record Volume 155, Number 50 (Tuesday, March 24, 2009)]
[Senate]
[Page S3659]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CARDIN (for himself and Ms. Mikulski):
  S. 673. A bill to allow certain newspapers to be treated as described 
in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt 
from tax under section 501(a) of such Code; to the Committee on 
Finance.
  Mr. CARDIN. Mr. President, Thomas Jefferson, a man who was vilified 
by newspapers daily, once said ``If I had to choose between government 
without newspapers, and newspapers without government, I wouldn't 
hesitate to choose the latter.'' Like Jefferson, I believe that a well-
informed public is a core foundation of our democracy. Watergate. AIDS. 
Tobacco. ENRON. AIG. News stories, uncovered by journalists, bring the 
most important stories of our nation's history to the front page, and 
thus into public debate.
  I rise today to introduce the Newspaper Revitalization Act, to help 
our disappearing community and metropolitan papers by allowing them to 
become non-profit organizations. Newspapers across the country are 
closing their doors, slashing their staff, and shuttering bureaus in 
the United States and around the world. The Philadelphia Inquirer, The 
Seattle Post-Intelligencer, The Rocky Mountain News, the Philadelphia 
Daily News, the San Francisco Chronicle, and my own Baltimore Sun are 
either in bankruptcy, or facing bankruptcy and closure. The Los Angeles 
Times has reduced its newsroom by one-half, the Miami Herald and 
twenty-eight other dailies have laid off at least one-quarter of their 
workforces in the past year. At the largest daily newspaper in New 
Jersey, The Star-Ledger, 45 percent of the editorial staff took buyouts 
when the owner threatened to sell the newspaper. Increasing numbers of 
metropolitan regions may soon have no local daily newspapers.
  The economy has caused an immediate problem, but the business model 
for newspapers, based on circulation and advertising revenue, has been 
weakening for years. At the end of 2008, advertising revenue was down 
by about 25 percent and according to a December forecast by Barclays 
Capital, advertising revenue will drop another 17 percent in 2009. 
Circulation is also down because of the many other sources for news. 
Today we have the internet, television, radio and blogs around the 
clock. Now, some might say these are all reasons why we may not need 
daily print newspapers anymore. But they are wrong.
  While Americans have quick access to the news, there remains one 
clear fact, when it comes to original in-depth reporting that records 
and exposes actions, issues, and opportunities in our communities, 
nothing has replaced a newspaper. Most, if not all sources of 
journalistic information, from Google to broadcast news or punditry, 
gain their original news from the laborious and expensive work of 
experienced newspaper reporters diligently working their beats over the 
course of years, not hours. According to the Pew Research Center's 
Project for Excellence in Journalism, a typical metropolitan paper ran 
70 stories a day, counting the national, local and business sections, 
whereas a half-hour of television news included only ten to twelve. 
Research further shows that broadcast news follows the agenda set by 
newspapers, often repeating the same items with less detail. Newspaper 
reporters forge relationships with people; they build a network, which 
creates avenues to information.
  These relationships and the information that follows are essential in 
a free, democratic society. Without it, accountability is lost. In a 
2003 study published in the Journal of Law, Economics, and 
Organization, the relationship between corruption and ``free 
circulation of daily newspapers per person'' was examined. The study 
found that the lower the circulation of newspapers in a country, the 
higher it stands on the corruption index. In another study, published 
in 2006, it is suggested that the growth of a more information-oriented 
press may have been a factor in reducing government corruption in the 
United States between the Gilded Age and the Progressive Era. 
Newspapers provide a form of accountability. They provide a ``check'' 
on local governments, State governments, the Federal Government, 
elected officials, corporations, school districts, businesses, 
individuals and more. We need to save community newspapers.
  The Newspaper Revitalization Act provides help. It will allow 
newspapers to operate as non-profit organizations, if they choose, 
under 501(c)(3) status for educational purposes, much like public 
broadcasting. These newspapers would not be allowed to make political 
endorsements, but would be allowed to freely report on all issues, 
including political races. Advertising and subscription revenue would 
be tax exempt and contributions to support coverage or operations could 
be tax deductible.
  While this may not be an optimal choice for some major newspapers or 
corporate media chains interested in profit, it should be an option for 
many local newspapers fast disappearing in our States, cities and 
towns. This option should cause minimal revenue loss to the Federal 
Government as most newspaper profits have been falling for years. In 
this economic climate, and with the real possibility of losing 
community newspapers, this would be a voluntary option for owners to 
save their paper. It is also a model that could enable local citizens 
or foundations to step in and preserve their local papers. I want to 
urge my colleagues to support this legislation and take action to save 
newspapers.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 673

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. TREATMENT OF CERTAIN NEWSPAPERS AS EXEMPT FROM TAX 
                   UNDER SECTION 501.

       (a) In General.--Paragraph (3) of section 501(c) of the 
     Internal Revenue Code of 1986 is amended by inserting 
     ``(including a qualified newspaper corporation)'' after 
     ``educational purposes''.
       (b) Qualified Newspaper Corporation.--Section 501 of the 
     Internal Revenue Code of 1986 is amended--
       (1) by redesignating subsection (r) as subsection (s), and
       (2) by inserting after subsection (q) the following new 
     subsection:
       ``(r) Qualified Newspaper Corporation.--For purposes of 
     this title, a corporation or organization shall be treated as 
     a qualified newspaper corporation if--
       ``(1) the trade or business of such corporation or 
     organization consists of publishing on a regular basis a 
     newspaper for general circulation,
       ``(2) the newspaper published by such corporation or 
     organization contains local, national, and international news 
     stories of interest to the general public and the 
     distribution of such newspaper is necessary or valuable in 
     achieving an educational purpose, and
       ``(3) the preparation of the material contained in such 
     newspaper follows methods generally accepted as educational 
     in character.''.
       (c) Unrelated Business Income of a Qualified Newspaper 
     Corporation.--Section 513 of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new 
     subsection:
       ``(k) Advertising Income of Qualified Newspaper 
     Corporations.--The term `unrelated trade or business' does 
     not include the sale by a qualified newspaper corporation (as 
     defined in section 501(r)) of any space for commercial 
     advertisement to be published in a newspaper, to the extent 
     that the space allotted to all such advertisements in such 
     newspaper does not exceed the space allotted to fulfilling 
     the educational purpose of such qualified newspaper 
     corporation.''.
       (d) Deduction for Charitable Contributions.--Subparagraph 
     (B) of section 170(c) of the Internal Revenue Code of 1986 is 
     amended by inserting ``(including a qualified newspaper 
     corporation as defined in section 501(r))'' after 
     ``educational purposes''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.
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