Robert McChesney and John Nichols of Free Press outlined a four-part tax plan in their book “The Death and Life of American Journalism.” Their call for government-subsidized journalism would be funded by:

• A 5 percent tax on all consumer electronic devices;
• A 3 percent monthly tax on Internet and mobile telephone services;
• A 2 percent sales taxes on advertising;
• And a 7 percent tax on broadcasters.

All told, McChesney and Nichols expect the plan to raise $18 billion to $21 billion. The proposals that would hit taxpayers directly, taxes on electronic devices and communications services, would generate $10 billion of that pot.

The bottom line alone is reason enough for outrage, but what about the unintended consequences, which are inevitable when government intervenes in any market? Adam Thierer and Berin Szoka of the Progress and Freedom Foundation spelled those out in the first installment of a series titled “The Wrong Way To Reinvent Media.” (The third report, on media vouchers, was published today, and the second report covered broadcast spectrum fees.)

Here are two of their insights:

• [A] tax imposed at the point of purchase would discourage users from buying new devices. This, in turn would slow adoption of new technologies and retard innovation in a market that has seen consumers move increasingly towards replacing their old devices every few years.
• Increased taxes on broadband bills might discourage some broadband providers from rolling out innovative new services as rapidly as planned. And once the new service tax is passed along to consumers — as all business taxes inevitably are — they might be less likely to adopt broadband, or might even cancel existing service.

The authors also examined the payout side of the subsidy equation — in other words, who would get the money? “Would blogs qualify?” they asked. “What about live reporting via Twitter or photo journalism via Flickr? Who gets to decide what qualifies as news worth subsidizing, as opposed to mere opinions or aggregation?”

Add it all up, and you have a nightmare scenario for taxpayers — a heavier tax burden, a less innovative culture and government as the information overlord. That’s worthy of a protest.

The company, whose revenue exceeded $100 million last year, makes money by corralling entertainment content into one place and selling ads around it. But as BNET noted earlier this month, while the business model is great for Hulu’s bottom line, it doesn’t pay so well for the studios that spend millions of dollars to create the content.

The arrangement may work in the short term, but the future for the studios looks as potentially bleak as the present is for news organizations:

The argument, of course, is that the producers don’t need to cover the costs off a Hulu because they already get money from the original broadcasts. But that depends on the networks essentially underwriting so a Hulu can have television at a cheaper price. What happens when enough viewers move to the Internet to get video with ad rates a small fraction of what television gets? There’s no more money to pay for new programming.

It’s the same problem news organizations face. When there’s not enough money, either quality suffers or people get out of the business because it can’t support them. It’s why Viacom (VNV) took “The Daily Show” and “Colbert Report” off Hulu — having new and popular programming there kept many users away from the Comedy Central site, and the direct ad revenue it might have seen. Expect more of the same as all the people at the Internet table look around when the bill comes, wondering who will pick up the tab.

Information may want to be free in the digital era, but for content to be king, someone has to pay for it.

The Pew Research Center’s Project for Excellence in Journalism put the question of government-subsidized journalism to news executives who are part of the American Society of News Editors and Radio Television Digital News Association, and most of the 353 executives who responded voiced serious reservations about the idea.

The survey found that 75 percent of all news executives, and 88 percent of newspaper executives, have “serious reservations” about direct government subsidies. Nearly half (46 percent) are even concerned with the idea of tax credits for news organizations, and only 19 percent support that idea despite ongoing industry woes.

The comments that news executives offered in the survey are telling:

• “If the government becomes the ‘money bags’ for journalism, journalism will become the ‘bag man’ for the government,” wrote a member of RTDNA. “This would be an assault to the First Amendment of the Constitution.”
• “The lines become too blurred if we begin taking donations and subsidies. Even if we remain aggressive in coverage why would readers believe we are independent?”
• “Government involvement in any form is a terrible idea.”

The news executives are concerned about the future of journalism as a profitable profession. Nearly a third (29 percent) think their news organizations could be insolvent within five years. Add the 18 percent who give their companies 10 years of survival, and nearly half of news executives clearly are pessimistic about the future.

But they still have the sense to realize that the FCC and FTC, two agencies actively weighing government intervention in the media sector, are not the places to find the solution.

Hopefully the bureaucrats will listen to the news executives whose careers are at stake and stay out of the way as media firms continue to experiment with local search products, micro news and other revenue models outlined in the survey.

DeLong has extensive experience with the topics. He served as a senior fellow at the Progress and Freedom Foundation, where he headed its Center for the Study of Digital Property and ran the IPCentral.Info Web site.

DeLong currently is a vice president and senior analyst at the Convergence Law Institute, and he has worked at the Competitive Enterprise Institute and the National Legal Center for the Public Interest.

His government experience includes tours as research director of the Administrative Conference of the United States, assistant director for special projects in the Bureau of Consumer Protection of the Federal Trade Commission, and senior analyst in the Office of Program Evaluation of the U.S. Bureau of the Budget.

Check back here regularly for DeLong’s tech policy insights.

That’s the only conclusion to reach after reading the Internet firm’s joint FCC filing with the Media Access Project and Dish Network earlier this month, and its joint Wall Street Journal op-ed with Verizon yesterday.

The op-ed, co-authored by CEOs Eric Schmidt of Google and Ivan Seidenberg of Verizon, espouses “minimal government involvement” as the best path to broadband growth in America.

The Internet has thrived in an environment of minimal regulation. While our two companies don’t agree on every issue, we do agree generally as a matter of policy that the framework of minimal government involvement should continue.

The FCC underscores the importance of creating the right climate for private investment and market-driven innovation to advance broadband. That’s the right approach and why we are encouraged to see the FCC’s plan.

But Google was all for broadband regulation March 19 when telecommunications and media counsel Rick Whitt met with FCC officials. The ex parte filing that recaps the meeting includes a chart titled “Potential Basis for Government Oversight of Broadband Networks,” along with this telling summary of the discussion:

We noted that, especially in light of recent uncertainty surrounding the extent of the FCC’s broadband jurisdiction under the Communications Act, the FCC should take the steps necessary to build a complete legal and evidentiary record to confirm the agency’s oversight authority, whether under Title I, Title II, Title VI, or other pertinent provisions.

The three words “minimal government involvement” in the Journal op-ed, coming as they did from Schmidt and in alliance with Seidenberg, spooked Free Press, one of Google’s allies in pushing for network neutrality rules.

But when Google is saying one thing publicly and another behind closed doors at the FCC, it’s impossible to know where the company truly stands on the issue of broadband regulation.

The groups say Sprint is blocking text messages for Haiti earthquake relief, but as Digital Society director Michael Turk noted last week, the wireless carrier is just following procedures designed to protect its customers from phony charities.

Despite Free Press acknowledging privately to Sprint that the company has not blocked the “short code” for text-based relief donations, the group is still embracing that false storyline publicly — on its blog and Facebook fan page, and in a misleading petition. Public Knowledge repeated the false allegation in a new video. And both groups complained to the FCC.

The campaign of distortion was enough to make Sprint spokesman John Taylor expose the two faces of the “public interest” groups. Here’s what he has had to say to and about Free Press and Public Knowledge the past few days:

Our concern is that Free Press, Public Knowledge and others have created the false impression that Sprint has blocked mobile fundraising by [Catholic Relief Services]. We have not done so, and it’s damaging to the credibility of Free Press to suggest otherwise. … I hate to see Free Press mislead the public in this way.

The most important point for people to know is despite the claims by Free Press and Public Knowledge, there has been no shutdown of this code by Sprint. I’ve spoken to Chris Riley and Liz Rose at Free Press earlier today, and [they] agreed that that was the case; I’m not sure why the Facebook page is still misleading people into believing otherwise.

I don’t understand why either organization would risk damaging their credibility by deliberately misleading reporters and the public into believing that Sprint’s business practices are something different than they actually are. … [T]he next time I read a news story quoting someone from Public Knowledge and Free Press, I will look at their claims more carefully.

It’s clear that Free Press and Public Knowledge are determined to achieve their policy goal — “impose a rule of law to govern text messaging” — even if that means continuing to misrepresent facts.

What is “free culture”?
“Information wants to be free,” an early rallying cry on the Internet, is at the core of the free-culture philosophy. Thierer noted that it encompasses an array of ideas, including less stringent copyright rules and open-source software whose code can be viewed and altered by users. But he said radicals in the free-culture movement dream of a “quixotic utopianism” that spells the end of intellectual property rights. “If we don’t have strong protections for certain types of creativity … we are going to lose something in our society and in our economy,” Thierer said.

Who is behind the free-culture movement?
Free Press, started by “the neomarxist academic Robert McChesney,” is the most prominent group in the movement, Thierer said. He said the group has been quite successful in shaping policymakers’ views of “public media” and government control of proprietary networks, among other topics. “They have some fairly radical thinking, and yet somehow it’s become mainstream in this day and age.” Thierer’s take on the push for public media: “It’s a blueprint for a press takeover, and I’m surprised that it’s getting traction” at the FCC, FTC and throughout the Obama administration.

What’s the content solution in the digital age?
The first step, Thierer said, is to make sure government does not worsen the problems of a changing media culture by pursuing “dangerous interventions” such as bailouts and subsidies. Beyond that, government policies need to give media companies the flexibility they need to adjust their business models and survive. Thierer questioned “the crazy quilt of rules” that govern who can do what, where and how. “At some point, these rules have essentially retarded the creation of a new type of marketplace that would allow some of these traditional media entities to survive and thrive.”

[Disclosure: Arts+Labs contributes to Digital Society but has no editorial oversight over the group.]

The Corporation for Public Broadcasting, looking to counter what it sees as a decline in local journalism and original reporting nationwide, said it is making funding available to set up seven regional reporting projects that will be collaborative efforts between public radio and TV stations.

The Local Journalism Centers, as they are being called, will each hire teams of reporters and editors, as well as community outreach managers, to report on an issue of regional relevance, including the reinvention of the industrial upper Midwest economy, efforts in upstate New York to attract innovative businesses, and agribusiness in the Plains.

Media reformers are sure to point to this experiment as an example of what federal subsidies, via CPB and perhaps new entities like it, could do for the professional news business. But all subsidies will do is feed what John Stossel of Fox News aptly called “journalism parasites.”

“Journalists shouldn’t get government funds,” Stossel said. “Using NPR and PBS as a defense reminds me of the child who killed his parents then pleaded for mercy because he was an orphan.”

In short, the Internet is a competitive, vibrant and expanding ecosystem thanks to the hands-off regulatory approach implemented by the Clinton and Bush administrations, and public officials need to stop trying to cram the Web into a telecommunications box that is nearly a century old.

Verizon executive Tom Tauke made that case Wednesday in a compelling speech at the New Democrat Network, and he earned qualified praise from at least one critic. “Speech by VZ’s Tauke was a serious contribution,” tech analyst Kevin Werbach tweeted. “I certainly don’t agree with everything, but he posed many of the right questions.”

Tauke compared communications law that dates back to 1929 with the Winchester Mystery House in San Jose, Calif., and its maze of stairways to nowhere and dead-end hallways. The law has become an “interesting maze” that is sorely in need of a remodeling job, and he sketched a blueprint for policymakers to consider.

Tauke outlined four principles for Internet policies going forward. They should: 1) empower consumers to choose the products and services they want; 2) ensure online security and privacy in ways that are “uniform across the ecosystem”; 3) make consumer access and adoption priorities; and 4) protect consumers and ensure that the free market is working.

Tauke largely avoided making specific policy suggestions, but he did call for restructuring the way the federal government subsidizes communications.

Providers currently collect universal service fees from existing customers and serve “corporate intermediaries” to subsidize access in underserved areas. He panned that approach, arguing instead for direct support like food stamps — “competitive subsidies that are technologically neutral and targeted solely for the benefit of consumers.”

On a broader scale, Tauke urged changes to the rule-making process in order to gain more input from experts in the field and ensure “flexible, adaptive oversight”:

[F]ederal enforcement agencies could structure themselves around an ongoing engagement with Internet engineers and technologists to analyze technology trends, define norms to guide such questions as network management, and understand in advance the implications of new, emerging technologies.

Technology leaders and experts from all players involved in the Internet should set up voluntary organizations and forums to provide advice, recommendations, and advisory opinions to government agencies. This will help inform the agencies’ role as backstops that deter damaging activities that undermine the vibrant competition and openness that defines the Internet.

Tauke emphasized that it’s a job for Congress, which would need to write into law “clear statutory authority” for the ruling body, whether that be the FCC, FTC or a new agency.

Adam Thierer, president of the Progress and Freedom Foundation, said Tauke’s plan is similar to the Digital Age Communications Act that PFF sketched in 2005 with the help of 50 scholars. Telecom industry critics portrayed Tauke’s speech as an attack on the FCC, but Thierer accurately captured the tone. “Instead, he speaks generically about the need for a more sensible process.”

NDN, a think tank built on the “third way” philosophy of recognizing both the value of the free market and the role of government in the marketplace, was a fitting venue for Tauke’s speech. He recited statistics that prove the Internet has thrived in a deregulated market but also acknowledged that government has “a legitimate interest in ensuring a functioning marketplace.”

“No one is suggesting that the Internet space should be the wild, wild West,” Tauke said. It needs a “rule of law”; it just doesn’t need one written for another era.

He said the ultimate goal should be to create an oversight system that targets “bad actors” without stifling innovation and discouraging the kinds of investments that built the system. “Good public policy is always good for companies that want to play by the rules.”

UPDATE: AT&T’s Jim Ciconni seconded Tauke’s motion for a rethinking of the Internet policy structure in a post on his company’s policy blog: “If there are questions about the authority of the FCC in the Internet ecosystem, the proper answer is not for the FCC to get adventurous in interpreting its authority, as some are urging. Instead, any question of the FCC’s jurisdiction over the Internet should properly be referred to the Congress for resolution.”