FTC dodges Drudge Tax questions

Agency head complained of 'free ride' for online news readers
Washington Times
Jun. 11, 2010

Federal Trade Commission (FTC) leaders are attempting to distance themselves from controversial proposals published in a May 24 working paper on "reinventing" the media. The report presents a suite of options through which government could step in and supposedly rescue journalism, most notably by imposing taxes. A fee could be levied on websites such as the Drudge Report that link to the best news of the day, or a tax could be imposed on consumer electronics such as iPads, laptops and Kindles. Funds collected would be redistributed to traditional media outlets. FTC Chairman Jon Leibowitz torpedoed the device tax in testimony Wednesday before a Senate Judiciary subcommittee, saying, "I think that's a terrible idea."

The backpedaling is not surprising, as the suggestions coming out of the headquarters at 600 Pennsylvania Ave. are about as unpopular as they come in Washington. A poll released Tuesday by Rasmussen Reports found that three out of four of those surveyed opposed taxing gadgets. About the same amount opposed the Drudge Tax. "The American people have absolutely no interest in taxing new media or consumer electronics to prop up an industry that's clearly on its way out," pollster Scott W. Rasmussen said in an interview.

Trial balloons are a fact of life inside the Beltway. When the administration and Congress want to enact a politically controversial policy, they often punt the issue to an independent federal agency whose leadership need not face the wrath of voters. Inside the agency, potentially unpopular ideas are presented first by staff so commissioners can jettison plans that prove untenable. Mr. Leibowitz declined a request to comment more specifically on the Drudge Tax. The agency's other commissioners referred questions to the FTC Office of Policy Planning, whose head reports to Mr. Leibowitz.

Passing the buck is a classic bureaucratic dodge. The FTC claims that the well-developed proposals released last month were simply an enumeration of options suggested in "public comments." In fact, the agency's Federal Register announcement for the proceeding questioned the propriety of news-aggregator websites that "do not pay for content" - this document was filed long before public hearings were held.

The report's views also happen to match positions Mr. Leibowitz has held in the past. Before joining the FTC, he was vice president of the Motion Picture Association of America, an organization that defends an extreme view of copyright law in order to prop up Hollywood's increasingly obsolete business model. At a December workshop, Mr. Leibowitz complained that online news readers get a "free ride instead of paying the full value - or in fact paying anything - for what they're consuming."

Despite the retreat on the electronics tax, it appears Mr. Leibowitz and his staff have not abandoned the opinion that the problems facing journalism can and should be solved by government - even if the exact form this control would take is open to negotiation. As the Obama administration has demonstrated its willingness to ignore negative public opinion in order to expand government involvement in areas such as health care, it is important for Congress to step in and deflate the FTC's latest trial balloon. Government subsidies will destroy, not save, journalism.

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