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What The Media Tell Americans About Free Enterprise

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August 1996


Issue Review: Schizophrenic on Corporate Welfare
Coverage of Business Subsidies

When General Colin Powell, in his speech at the Republican National Convention, challenged his party to rein in corporate welfare and not just other parts of government, reporters responded approvingly. But a look at their own past record in coverage (or lack of coverage) of subsidies to business and industry reveals that reporters themselves need to start challenging both parties on the issue.

"One of the things that I thought was interesting about Colin Powell's speech," commented MSNBC correspondent Andrea Mitchell, "is that he did talk about the hard choices and he said, `Listen friends, let me put it to you. We're going to have to give up corporate welfare as well.'" PBS anchor Charlayne Hunter-Gault said to the Family Research Council's Gary Bauer: "You heard the reaction in the room at the conclusion of the speech. You also heard Mark [Shields] say that when he talked about corporate welfare and welfare for the wealthy there was a deafening silence in the room. How do you think this crowd is really receiving this message?"

As important is how the media have received this message. For while they are interested in corporate welfare now, the real deafening silence has been in the media's coverage of business subsidies. As reported by MediaNomics in past issues, reporters over the last several months have often either ignored corporate welfare when it was a major part of a prominent issue, or they have actually promoted business subsidies.

Example: Last summer when some budget cutters in Congress were trying to cut business pork, reporters came to the rescue. CNN's Charles Bierbauer, for example, on the July 4, 1995 World News, reported on the threatened elimination of the U.S. Travel and Tourism Administration (USTTA). Introducing the story, anchor Bobbie Battista described the USTTA as "the small federal agency set up to lure tourists to the U.S....now on the chopping block."

Bierbauer quoted Greg Farmer, undersecretary of commerce, defending the program: "There's a new job created every 2.5 seconds in the travel and tourism industry in the world. I want the United States to get its fair share." Is the USTTA corporate welfare? Bierbauer didn't ask. Bierbauer's conclusion: "Tourists may continue to come to the United States, of course, but they may no longer have Uncle Sam to lead them here."

John Roberts, on the June 25, 1995 CBS Evening News, warned that budget cuts may hurt summer jobs programs. "For the past 30 years," Roberts said, "kids from low-income families have had help from the federal summer jobs program, which funds student employment." Roberts quoted Labor Secretary Robert Reich as pointing out that "one-third of disadvantaged kids who get summer jobs in the private sector wind up working for the same companies in permanent jobs." So does taxpayer funding of businesses training costs constitute corporate welfare? Roberts didn't ask Reich.

A July 2, 1995 Washington Post story assumed the Commerce Department was necessary and didn't bother interviewing critics who were calling it the embodiment of corporate welfare. The entire story was from the point of view of then-Commerce Secretary Ron Brown. According to the Post, Brown, "a strong advocate of free trade, today expressed confidence `cooler heads will ultimately prevail' and his department will not be dismantled by Republicans in Congress."

The Post said the secretary had been "leading trips abroad with American businessmen in hopes of prying open overseas markets" and quoted Brown as saying that "it's unbelievable that the United States would be the only country in the world where the private sector would not have a seat at the cabinet table." The Post didn't give any space to non-administration views, such as those of economist Murray Weidenbaum of the Center for the Study of American Business. "Of course, the relatively few who benefit from the Secretary of Commerce personally opening doors for them think this is a great idea," Weidenbaum told the House Commerce Committee. "Millions of other businesses, large and small, however, pay the taxes that finance these programs. They do not benefit from this personal attention. In a nutshell, this whole process is unfair."

Sometimes journalists simply ignored corporate welfare altogether, even when it was part of an issue they were covering. This past spring, for example, most reporters accepted at face value the Clinton Adminstration's expensive plan to restore parts of the Florida Everglades. The fact that federal subsidies, supported by both the Clinton Administration and Republicans in Congress, were propping up the same sugar industry which threatened the Everglades rarely merited a mention.

The Clinton plan is "the largest infusion of federal dollars ever proposed for the Everglades, making it one of the biggest ecological restoration projects ever," cheered CBS News correspondent Art Rascon on the February 20 This Morning. Miami correspondent Peter Katel, in the March 4 Newsweek, added that "Clinton's plan is the high-water mark of reform. Senate Majority Leader Bob Dole and Florida's two senators have a more modest plan to spend $200 million of taxpayer funds -- not sugar money -- to buy some of the sugarcane land for water-restoration projects." On February 20 reporter Mike Clary of the Los Angeles Times called Clinton's plan "as ambitious and comprehensive as any environmental project of recent years."

But none of these reporters made the connection between the subsides provided to industry by the sugar tariff and damage to the Everglades. None asked why the government, before spending a lot of money, shouldn't just bring down the tariff. Only Eric Schmitt of the New York Times criticized the subsidies. "The government sets price supports that maintain domestic sugar prices at twice those on the world market and, according to the General Accounting Office, cost consumers $1.4 billion a year," Schmitt pointed out. "Strict quotas on cheaper foreign sugar maintain the support price levels, which critics say benefit a small number of wealthy plantation owners and encourage overproduction in environmentally sensitive areas like the Florida Everglades."

Such subsidies to business constitute some of the least defensible of federal spending programs. Although neither Republican nor Democratic politicians want to talk about corporate welfare, it has critics outside of Congress and the Clinton Administration on both the right and the left. Reporters generally cheered Colin Powell for bringing up corporate welfare in his convention speech. But when it comes to specific programs, they have usually been slow to mention corporate welfare's critics and quick to assume that business subsidies are justified.


Rich Noyes


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