From Watchdog to Politico: How the Rural Utilities Service boondoggled broadband

Wednesday, August 19th, 2015


The best of intentions; the worst of plans

The stimulus package that Congress and President Obama passed in 2009 was supposed to be the gift that kept on giving, but too often it has proved to the gift that keeps on taking.

That is the conclusion, at least, of a recent Politico investigation into stimulus money that was intended to expand broadband coverage to America’s rural communities, which sorely lack quality Internet access. The story goes back to the creation of the Rural Utilities Service during the Great Depression. Originally the agency was tasked with bringing electricity to rural areas that weren’t being serviced by private companies. Through the stimulus package and in response to the “Great Recession,” the agency has attempted to pull off a similar feat in the digital age by bringing the modern advances of high-speed Internet access to America’s countryside.

A key part of President Barack Obama’s blueprint of recovery involved bringing quality broadband to farmers and remote businesses so that they could compete in a global, digital economy. In 2011 RUS was awarded $3.5 billion in aid to service sparsely populated, hard-to-reach areas.

Four years and four directors later, however, Politico concluded that “RUS never found its footing in the digital age.” The report points to misfires and cronyism at every turn: the agency funded networks in well-wired population centers, poor management led to project stumbles and failures, borrowers defaulted on loans, and all along lawmakers suppressed their doubts and gave the agency political cover.

The agency initially projected in 2011 that its “investments in broadband will connect nearly 7 million rural Americans.” It boasted of accomplishing this through nearly 300 projects that it approved through the stimulus package.

Many of those projects, however, have not come to fruition. RUS has quietly killed 42 of them, and with the agency required to “substantially complete” construction on the remaining projects before the end of September, 2015, it finds itself in a race against the clock. Politico found that about half of the infrastructure projects given the green light by RUS have not drawn their full funding. As a result, $277 million in potential investments could end up being returned to the Treasury, representing at best a huge waste of time for the stimulus funds. RUS gradually lowered its original estimate of how many homes will benefit from its projects from 7 million down to 728,000 in March of 2014, and now won’t even list a figure. Even worse, it is unclear how many people have received improved Internet access, because the agency can’t tell exactly who its stimulus dollars have served.

In short, the government’s attempts to invest in services in places neglected by private companies have been nothing short of a boondoggle.

Problems in the Land of 10,000 Lakes

shutterstock_270238202To drive this point home, the Politico report highlights the plight of Lake County, Minnesota, a story that had been covered by Minnesota Watchdog several months earlier. RUS’ attempts to bring greater broadband coverage to the rural county have turned out to be one of the most egregious examples of how federally-backed loans and grants, with inept management and all of their red tape, can suck the vitality out of a community rather than invigorating it.

As Minnesota Watchdog reported late last year, Lake County officials promised at the beginning of the project that it would not cost local taxpayers anything.

“Lake County is acting as a conduit to receive federal financing to build out the network. The taxpayers will not be responsible for any debt,” the county website said in a blurb that has since been scrubbed. An FAQ on the website was updated to say that the county has invested $3.5 million to bring greater broadband access, “a remarkably small amount given the scope of the project and benefits to the area.”

That $3.5 million represents the unexpected cost of RUS rejecting the project’s bond financing. Before the agency sent a single check to Lake County, it forced the county to pony up its own funds to keep the project on track.

But that was just the beginning. Minnesota Watchdog found that that figure soon ballooned to $6 million. And after RUS suspended payments amid concerns that the county could not pull off the project on time and on budget, local officials decided to authorize another $15 million in funding from local taxpayers to get the project back on track.

Just like that, the “remarkably small” amount covered by local taxpayers has become remarkably large for the sparsely populated county. It has left county officials feeling betrayed by the federal program, which originally approved and said it would fund Lake County’s proposal of $66 million for an ambitious plan to cover an area with about 16,000 residents.

Now time is running out. The broadband network is still under construction and behind schedule. At this point, Politico notes, the county probably won’t be able to draw all of its federal funding by the end of September and will thus end up losing another $6 million from RUS.

Perhaps the Lake County should have taken a cue from the private sector before throwing its hat in with the federal government and putting every resident on the hook for $1,400 (the per-person cost of $15 million).

Kirk Lehman, a manager for a competing broadband provider, can’t see how the government intends to make the Lake Communications broadband economically viable.

“A lot of folks have looked at the numbers, and there’s not enough customer base to support the Lake County debt,” he told Minnesota Watchdog. “I don’t care how you slice and dice it, there’s just not enough of a customer base there.”

SolarCity: Elon Musk’s empire of government subsidies



Tech entrepreneur Elon Musk is not subtle about his business strategy: follow the government money.

That’s the conclusion, at least, of a recent article in the Los Angeles Times investigating how the businessman of SolarCity, Tesla, and SpaceX fame has built his multibillion-dollar fortune through companies that have benefited from an estimated $4.9 billion in government subsidies.

Politicians love latching on to the SolarCity, Tesla, and SpaceX brands, which promise to lead the way into a greener future. The result is dependence on a slew of government incentives, “including grants, tax breaks, factory construction, discounted loans and environmental credits,” reports the LA Times, adding that “it also includes tax credits and rebates to buyers of solar panels and electric cars.”

It’s gotten so egregious that states are actually competing to give Musk’s companies money, according to Musk biographer Ashlee Vance. “As his star has risen, every state wants a piece,” she said.

The story goes on to list some of the most egregious examples. The state of New York will spend $750 million to help SolarCity build a solar panel factory in Buffalo, which the company will lease for $1 a year and pay no property taxes on for a decade. And on the federal level, the Treasury Department has doled out almost half a billion dollars in direct grants to SolarCity.

Tesla, meanwhile, recently secured an agreement with Nevada to build a huge battery factory in Reno that includes $1.3 billion of incentives. In its home state of California, the company has made $517 million by selling environmental credits to other automakers, which must purchase credits from the state and federal government if they don’t sell enough zero-emission cars.

Hedge fund manager Mark Spiegel offers a devastating summary to the LA Times: “Government support is a theme of all three of these companies, and without it none of them would be around,” he said. Spiegel is betting that Tesla’s stock will fall, even though it has more than doubled over the last two years.

This raises a number of important questions for the taxpayer. How much longer will the public largesse continue? Will these companies survive without government subsidies? And even if they do, will the public ever recoup the value of the alleged benefits these green technologies will bring?

Readers who have been following SolarCity at Watchdog, however, shouldn’t be surprised by the LA Times’ findings. Watchdog reporter Tori Richards has written a series of stories over the past year that help fill in the picture of the Musk empire’s dependence on taxpayer funds.

In November of last year, for instance, she reported that SolarCity stock has soared since it went public, even though a company report admitted that business would be difficult to maintain without government help.

“If, for any reason, we are unable to finance solar energy systems through tax-advantaged structures … we may no longer be able to provide solar energy systems to new customers on an economically viable basis,” it said.

Even with the help of $244 million in federal grants , SolarCity posted losses of $55 million in 2013, and was running a $166 million deficit at the time. This year, it doesn’t appear much has changed as the government has continued to prop up the solar industry – most recently through an extra $32 million in funding from the Department of Energy.

More recently, Richards covered Congressional leaders’ calls to end the “potentially deceptive sales tactics” of companies like SolarCity that use a zero-down, 20-year lease business model. Congress’ attention was drawn to solar companies by consumer complaints that their solar panels weren’t bringing them their promised savings. As Richards reported, many customers, such as northern California resident Jeff Leeds, have found themselves locked into costly deals thanks to under-producing solar panels on top of their homes. Leeds later received a notice from his bank informing him that SolarCity had placed a lien on his home, which held him up from closing a loan to buy another house.

Richards’ coverage of SolarCity’s $750 million plant deal in Buffalo found that many of the details of the contract were confidential – even though public money is at stake and the contract was acquired through a Freedom of Information request. State officials claimed the redacted portions of the contract protected trade secrets.

For now, Musk’s companies have “a great strategy, but the government will cut you off one day,” warns Dan Dolev, an analyst at Jefferies Equity Research.

If and when those government funds dry up, don’t say we didn’t warn you.


Digging deeper: plenty of citizens share news, but why don’t they create it?



Inscribed over the main entrance to the Nebraska State Capitol is a saying taught to philosopher Hartley Burr Alexander by his father: “The Salvation of the State is Watchfulness of the Citizen.”

Alexander’s quote captures the bedrock philosophy of the Franklin Center and our journalism team at Watchdog.org. It is vital to have professional investigative journalists on the beat, but their stories only make a difference to the extent that citizens read and respond to them. As we discussed here last month, local news still matters to most Americans in the digital age. That post focused on a recent Pew study of the news consumption patterns of three small- to mid-sized American cities. In a follow-up blog post on that report, Pew researcher Jesse Holcomb has taken a deeper look into the study’s findings about citizen engagement in the news process. His conclusion is mixed: “News audiences spread the word, but few get involved in local journalism.”

“To what extent is the public directly engaging in acts of journalism?” Holcomb asks. Its case studies of Denver, Macon, Ga., and Sioux City, Iowa – along with previous research – suggest it’s a “small but measurable share.”

In all three of these cities Pew found that residents were much more likely to share news online than to actually post or submit news themselves. Sharing was highest in Denver, where just over half of residents had shared a news story through a digital channel like email or social media in the past year. A smaller but still significant portion of respondents in Sioux City (40 percent) and Macon (36 percent) also shared news digitally. However, the report found that “no more than one-in-ten residents of each city had submitted their own local news content to a news outlet or website.”

shutterstock_155584379This is consistent with a similar survey Pew conducted last year, Holcomb noted, which found that “half (50%) of U.S. adults who are social-network users share or repost news stories, videos or images. But fewer post photos (14%) or videos (12%) that they themselves took of a news event.”

Obviously it is easier to share news stories than to produce your own original reporting. But thanks to advancements in mobile technology, the barriers to producing original news content are coming down. The Pew article points to new video streaming apps such as Periscope and Meerkat that will allow laypeople to easily distribute news. Even with these powerful new tools, however, this obviously still requires citizen journalists to have the news savvy to be in the right place at the right time so as to have information that has genuine news value.

In any case, Holcomb notes, it’s clear from these findings that “at least on one fundamental level, the public clearly plays a large role in the local news ecosystem.” More than a third of Macon’s residents (37 percent), for example, get local news from friends and neighbors. That’s just as many as those who rely on their daily newspaper (36 percent). The balance is similar in Denver. In Sioux City the daily newspaper still holds a more central role among residents, but getting news from others in the community still comes in as a top-three source for local news.

What does this mean for you? The report’s findings have two major implications. The first is simple: share important news stories! Another Pew study from 2011 found that 55 percent of adults said they got news and local information through word of mouth at least weekly. Tell your friends and family about big stories you’ve read and share them online. With the rise of social media sites like Facebook and Twitter, every individual can have at least a small voice and platform.

Second, part of the beauty of America’s free speech protections is that ordinary citizens have the freedom to report news from their own perspective – providing you take initiative, put in the hard work, and stay truthful. To learn more about how you can become a citizen journalist in your community, check out our citizen stories at Watchdog Arena, and download our free Video Tipsheet for advice on capturing newsworthy moments from politicians, public meetings, protests and more.

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Police took $4.1 million from motorists and built a police station: Watchdog covers civil asset forfeiture


Richland PD sign civil forfeiture

What’s the deal with the Richland’s new police station?

At first glance, residents of Richland, Mississippi were probably thankful for their new $4.1 million police station, complete with a top-level training center and a fleet of black-and-white Dodge Charger police cars, especially with the sign announcing that funds for it were “tearfully donated by drug dealers.” It seemed like a win-win. After all, who could argue against money from bad guys going to keep us safe?

Mississippi Watchdog reporter Steven Wilson, however, took a deeper look at the Richland Police Department, and uncovered a much different story behind the new station. While much of the money may have come from drug dealers, it was acquired through a much more controversial practice: civil asset forfeiture – property and cash seized from during traffic stops from motorists on the mere suspicion that they had committed a crime – no conviction necessary.

The sheer egregiousness of the practice launched Steve’s story up the ranks of top posts to reach the number two spot on Reddit, the “front page of the internet,” where nearly 6,000 readers upvoted the story and more than 3,000 commenters chimed in, driving tens of thousands of readers to learn about the huge forfeiture numbers racked up by Richland’s four-officer interdiction team, whose total civil forfeiture collection averages out to $72 per resident of the small town.

Watchdog Opinion contributor Logan Albright explains how civil asset forfeiture works: “If police or federal agents suspect that property has been involved in the commission of a crime, they can simply take it. No charges need be filed against the property owner, no trial must occur. In effect, the property itself is accused of a crime, and it’s up to the owner to prove its innocence if they ever wants to see it again.”

A long list of abuses

This story is hardly an isolated incident. Last year in Philadelphia, for example, Chris Sourovelis and his family lost their home after his son was caught by police selling $40 of heroin – a punishment that hardly seems commensurate to the crime. Reporting on the case exposed some of the worst aspects of Philadelphia’s civil asset forfeiture program, showing how the city’s police department and district attorneys’ office regularly seizes homes, cars and other property from suspected criminals without any conviction. In some cases this even took place without any charges being filed.

shutterstock_25312519At the federal level, many innocent business owners have been targeted by the IRS through civil asset forfeiture laws, such as the Hirsch family from Long Island, NY, who own a distribution company. They had more than $446,000 in assets and cash seized by the Internal Revenue Service in 2012, even though they were never charged with a crime. The federal government eventually dropped its case against the Hirschs, but it took nearly three years of legal battles for them to get their money back.

The issue has been steadily rising in the national consciousness lately, thanks to efforts by civil rights advocates and in-depth investigations by prominent mainstream publications like The New Yorker, The Washington Post, and The New York Times. It doesn’t take much political savvy to understand why civil asset forfeiture inspires activists and strikes a nerve with readers. The practice runs counter to many Americans’ sensibilities about property rights and the principle that citizens should be presumed innocent until proven guilty. It has its legal origins in British maritime law in the mid-1600s and first came into use widely in America during the Prohibition years, when police used it to seize cash and property from bootleggers. Since the war on drugs escalated in the 1980s, law enforcement has revived civil asset forfeiture to crack down on drug trafficking, and the practice has become steadily more lucrative. Justice Department seizures from a single program, for example, have risen from $407 million in 2001 to $4.2 billion in 2012.

The movement for reform

As more voters and the lawmakers who represent them become aware of civil asset forfeiture, proposals to reform the system have received substantial support from across the political spectrum. Two states that have passed reform this year, for example, have done so overwhelmingly despite having politically divided statehouses and governors.

Earlier this year New Mexico’s legislature unanimously passed a bill making significant reforms to its civil asset forfeiture laws, and it was signed into law by Governor Susana Martinez – a former prosecutor – in April. The state now requires a criminal conviction before property can be forfeited, proceeds from forfeitures will go into the general fund (rather than to local law enforcement budgets), and property owners have better due process protections such as a codified “innocent owner” presumption. New Mexico

In Montana, the Republican-dominated statehouse and Democratic governor Steve Bullock joined together in April and May to pass House Bill 463. Similar to reform in New Mexico, the law requires a criminal conviction before property can be forfeited, and it requires police to provide “clear and convincing” evidence tying the property to criminal activity for them to keep it. The Montana law does not go so far as to divert forfeiture revenue into a general fund, however.

The broad support for reform in these states suggests that for the rest of the country, one of the greatest obstacles to reform is ignorance. Watchdog stories are helping to change that though, and legislative efforts are underway elsewhere in the country.

In Virginia, a bipartisan group of lawmakers are leading an effort to curb the police’s ability to seize cash and property from innocent citizens. In Pennsylvania, lawmakers have begun calling for changes to the civil asset forfeiture system so that the “innocent until proven guilty” principle applies to law enforcement looking to take people’s property. And in Wyoming, the senate has supported civil asset forfeiture reforms with a decisive 80-9 vote on SF14. The measure was shot down by Republican Gov. Matt Mead, the legislature may consider updating the measure’s reforms to make them more agreeable to Gov. Mead.

Watchdog reporter Andrew Staub awarded Novak Journalism Fellowship

Monday, May 18th, 2015

Andrew Staub profileOn Wednesday, May 13, Pennsylvania Watchdog (formerly PA Independent) reporter Andrew Staub (pictured) became the fourth Watchdog.org reporter to formally accept a Robert Novak Journalism Fellowship. Andrew was awarded a $25,000, part-time fellowship during The Fund for American Studies’ annual Robert Novak Journalism Fellowship Awards Dinner at the National Press Club in Washington, D.C.

His project is titled “A Legacy of Prohibition: The fight to privatize Pennsylvania’s archaic liquor monopoly by introducing a free-market system to benefit state consumers.”

He sums it up like this: “That’s just a long way of saying I’ll be writing about how confusing it is to buy wine, liquor and beer in Pennsylvania.”

His work on the project begins September 1st.

Andrew previously worked as a reporter at The News Journal in Wilmington, Delaware, and The Citizens’ Voice in Wilkes-Barre, Pennsylvania. He graduated with a bachelor’s in journalism from Penn State University.

The Novak Journalism Fellowship Program was launched in 1994 to nurture a new generation of responsible journalists. Legendary journalist Robert Novak provided the inspiration for the program, which was named in his honor following his passing in 2009. Novak Fellows devote a full year to a journalism project supportive of American culture, a free society, and free enterprise.

Andrew joins Jon Cassidy as a current Watchdog.org reporter who doubles as Novak Fellow. Former Watchdog reporters Ryan Ekvall and Bill McMorris were also Novak Fellows.

Click here for a list of former and past fellowship recipients.

What does journalism mean for democracy: fewer journalists on the beat

Tuesday, March 24th, 2015


You may have seen some of our earlier stories on “Covering State Government Today, On the Frontlines with Nonprofit News,” along with “The Changing Nature of News: A Study of Five Online Nonprofit Groups.” Nonprofit and online news organizations are where reporting is happening at the state and local levels as traditional news reporting recedes with declining advertising and funding. But what are the challenges, other than funding, that these smaller news organizations face?

Threats Facing Citizen Journalists

Even with all the foment of new media channels and multiplying sources of information, there are profound threats from having fewer journalists on the beat. We tend to think of some relatively recent journalistic work like Watergate, the Clinton Impeachment, NSA Wiretapping, and others. Wikipedia has even assembled a complete list of U.S. federal political scandals dating back to the 1700s.

A few things closer to home actually pose considerable concern. For example, GreenTech Automotive filed an $85 million lawsuit against the Franklin Center for our reporting. This suit was tossed out of court, but it is the type of thing that poses a considerable threat to fledgling news organizations and citizen journalists who do not have the resources or skill sets to defend themselves while continuing to report the facts as they see them.

Here are just a few of the threats and concerns that readily come to mind:

  • Libel Suits. These suits can be used by organizations and governments to shut down reporting, including any financial support. How does a citizen journalist or small organization defend itself in these situations?
  • Access Issues. There is a growing challenge of gaining access as a journalist if you do not have a business card from a major news outlet. How does a small organization or citizen journalist challenge a refusal to allow access?
  • Protecting Sources. You may have seen our work about media shield laws. How does a citizen journalist or small organization find the legal talent to help them battle court or government directed efforts to identify confidential sources?
  • Freedom of Information Requests. These can be blocked, delayed, or redacted to the point of obfuscation. How does a small organization develop the skill set and stamina to pursue this vital method of gathering information?

Reporting Limitations

reporter typewriter b&wIn addition to threats there are limitations to news reporting that happen as a result of smaller organizations or even solo journalists reporting the news. These include:

  • Multiple Stories. It can come down to production capacity. How does a solo journalist or smaller organization cover multiple stories at any one time?
  • Big Data. More and more we are finding large news organizations sifting through big chunks of data to identify trends and develop insight into changes. How does a small organization find the skills and staff to accomplish this task? 
  • Legislative Activity. While a small organization may be able to dig into one or two key stories, how does it keep on top of all that is of concern on its particular beat? For example, BillTrack50 provides mounds of data on legislation underway at the federal and state level. If your beat is California, how do you keep up with the more than 1,000 bills? Plus, state resources vary by how up-to-date and robust their website is with legislative information and more.
  • Fact Checking. How does the smaller organization dig deep to back up their facts and do so without breaking the bank or running out of time? FactCheck.org and Politifact.com are two resources, but there needs to be more.
  • Power of Brands. There is a real power of brands. For example, the New York Times generates a great deal of credibility and power in addition to bringing considerable resources to bear on reporting. For small organizations or citizen journalists it is BYOB—Build Your Own Brand.

Positive Trends

The good news is that for nearly every threat a growing capability is being developed on the Internet to assist journalists. But even so, a critical mass of resources and expertise are still required to defend lawsuits and pursue leads that elude the best of citizen journalists or the smaller news organizations.

Another promising trend is for larger news brands to pick up stories from the smaller outfits. This is particularly appropriate in statehouse or investigative reporting where the mainline news organizations have significantly cut back on their own coverage and capabilities.

How Can You Respond?

Those threats can be overcome by supporting the revolution in reporting across the breadth of new media that has been emerging over the past several decades. These include our own watchdog reporting that continues to grow – now in place in 36 states, and expanding its coverage within those states.

You can also support those organizations and issues that are near and dear to your own heart. For example, we have invested considerable energy and resources both publicizing and shaping the debate about a media shield law. John Fund at the National Review says, “What the Franklin Center is doing is the most exciting thing in journalism.”

Step into the light: Franklin Center celebrates Sunshine Week

Wednesday, March 18th, 2015

sunshine week logo cropped

On Monday the White House made a startling announcement: it was removing a federal regulation that made its Office of Administration subject to the Freedom of Information Act. This is the office that handles record-keeping duties for the White House, like e-mail archiving.

Sadly, such obfuscating tactics reflect a widely-accepted line of thought that assumes transparency isn’t helpful for reform and is actually part of the problem in our government. The change in policy appears intentionally timed in conjunction with the scandal erupting around Hillary Clinton’s email usage as Secretary of State. But there’s another national event taking place this week, and the White House’s move only goes to underscore its importance: Sunshine Week.

What is Sunshine Week?

Sunshine Week is an annual celebration that takes place among news outlets, activists, and community organizations across the country. It centers on access to public information (or lack thereof) and aims to show how important it is for you and your community.

Sunshine Week originated in Florida – the appropriately nicknamed “Sunshine State” – as “Sunshine Sunday” on James Madison’s birthday in 2002. The Florida press at the time was reacting to efforts by the state legislature to close information off to the public in the wake of the 9/11 attacks and the controversial death of Dale Earnhardt, both in 2001. The idea caught on, and now includes a broad and deep coalition ranging from the Associated Press, to local papers like The Oklahoman, to high school students who live-tweeted an open records audit of their local government.

The aim of Sunshine Week – to shine the bright light of accountability on our government and those who serve in it – fits perfectly into the mission of the Franklin Center for Government and Public Integrity. Over the past five years, this week of heightened attention on the importance of transparency has given the Franklin Center an opportunity to celebrate the work we do year round to fulfill the vision of our namesake, Benjamin Franklin, of bringing integrity to our public institutions.

What is the Franklin Center doing about it?

shutterstock_128822344 edited“We need to guard against this being a press-only event,” said Andrew Alexander, a former Washington Post ombudsman and award-winning journalist, at a Newseum panel celebrating the Freedom of Information Act.

He’s right. Sunshine Week can only work to the extent that citizens are engaged and informed. Last year, for example, our citizen journalism team performed audits of their city, township, and county websites. They found that in many cases, their local government was actually doing a good job of making public information easily accessible, but hurdles to filing open records requests often remained.

This year, the professional journalism team at Watchdog.org is taking the lead through a series of stories made possible by OpenTheBooks.com. Through the government spending website, they uncovered stories about how the federal Small Business Administration has been poorly tracking the default rate of its loans, giving loans to luxury goods retailers like Lamborghini and Rolex, and essentially gambling millions of taxpayer dollars behind a wall of state secrecy.

In addition to this, Watchdog.org reporters have been drawing attention to failures to achieve greater transparency, such as an utter absence of support for transparency-increasing bills by the congressional delegation from Alabama and Mississippi.

Even the contributors for Watchdog Arena, our citizen reporting arm of Watchdog.org, got in on the action, reporting that even though a recent bill allowing more fees to be charged for right to know requests was defeated in New Hampshire, local bureaucrats still make accessing documents as hard as humanly possible. And in New York, they found that Hillary Clinton isn’t the only politician with email troubles. Governor Andrew Cuomo has found himself in the middle of an email controversy after he instituted a policy of deleting emails after 90 days.

We still have work to do

Such stories, however, are only the tip of the iceberg. Penetrating the dense government bureaucracy to make sense of what goes on behind the scenes is still notoriously hard. Current laws make it virtually impossible for government employees to go on the record, which is just one facet of the many-sided challenge of watchdog journalism. Such challenges are no reason to give reporters a pass for neglecting to ask hard questions and unearth the story behind the story. The role of the newsman has always been hard, but that is what makes it indispensable to democratic governance.

“We are not there to be their PR agents. We are there to do our job,” Alexander said about the tendency for reporters to content themselves with statements from government spokespersons.

The journalists at Watchdog.org could not agree more.

Who’s Watching Out for Our Rights? Legacy vs. Online Coverage of the IRS Scandal

Tuesday, February 17th, 2015

Shutterstock image

Let’s open with a quick quiz:

What news organizations first come to mind as the protectors of fundamental freedoms — 1st and 4th Amendment rights like speech, assembly, religion, privacy — against brazen government overreach and abuse of the little guy?

Did you answer The New York Times, The Washington Post, or maybe even an established TV news station?

If so, you’ll have problems with this next question: What 2013 scandal was one of the most egregious cases of governmental trampling of 1st Amendment-protected rights in recent years?

If you only rely on legacy news for your news, you’re not likely to know the answer: The IRS’ obstruction of hundreds of Tea Party applications for nonprofit status — an abuse that first came to light in May 2013 when the then-director of the IRS office in charge of these applications publicly apologized for the practice.

But you aren’t really at fault, not if you’re a legacy news-only reader.

When it came to reporting one of the most horrendous cases of government overreach and abuse in recent years, legacy news organizations looked the other way. Worse, they bought into the government’s excuses for such harassment – hook, line, and sinker.

An Egregious Case of Government Bullying

Here’s the background: In March 2010, as the run-up to that year’s midterm elections, the Obama administration began using the IRS to block Tea Party applications, and others from mostly conservative and religious groups, for tax-exempt nonprofit status by subjecting them to intense scrutiny and compliance demands. For example, the Ohio-based American Patriots for Against Government Excess, already halfway through the application process, was ordered in 2012 to provide all records of its social media activity, its membership and by-laws, and its interactions with politicians, among other things, in 60 days or have its application closed. Likewise, a Honolulu group told Watchdog.org of detailed IRS demands for photos, videos, names of attendees and speakers at public rallies, and copies and recordings of speeches at those events.

In contrast, in February 2010, the Champaign, IL Tea Party’s tax-exempt status request sailed through IRS offices in 90 days without a single question.

Investigators later found an August 2010 memo from Lois Lerner, head of the IRS applications office, instructing staff to target nonprofit requests containing “Tea Party,” “patriot” or “9/12″ — a reference to Glenn Beck’s group — and like phrases.

Lerner, coincidentally, initially blamed the scandal on the independent actions of a few low-level “line people in Cincinnati,” and Obama later insisted liberal groups were targeted, too.

Shutterstock imageThe IRS vs. Tea Party Scorecard: Legacy vs. New Media

Sure, legacy news organizations covered the IRS scandal. But how outraged were these news outlets, really?

Here’s a hint: the Columbia Journalism Review — hardly a Tea Party proponent — lumped legacy coverage into an August 2013 article partly titled, “How the media lost interest in IRS targeting, even as new facts emerged.”

In May 2013, when the scandal broke, two leading legacy papers reacted this way:

  • The New York Times published 8 articles, including 5 on Page 1
  • The Washington Post published 16 articles, including 8 on Page 1

Legacy coverage then plummeted in June, when the White House categorically denied any connection to the IRS’ singling out of Tea Party applications, and insisted liberal applications also were subject to IRS scrutiny. How badly did legacy coverage decline? The Times has published a total of five articles since May 2013 on the scandal, three of which are commentaries, including guest editorials.

The Big Three news channels haven’t done much better:

  • ABC, NBC and CBS news produced 136 broadcasts in the first seven weeks of the scandal, but only 14 more in 10 months that followed, according to NewsBusters.

The real outrage came from across new media — from the online news outlets that recognized the IRS’ manhandling of Tea Party applications as a targeted and eminently dangerous affront to constitutionally protected rights. And they went after the scandal with the saturation coverage that it, and the news reading public, deserved. Consider these numbers, from online-only news groups:

  • Townhall.com posted 41 articles in May 2013, and 1,890 articles to date
  • Real Clear Politics, 39 articles; 2,910 articles to date

And the list continues. Breitbart.com has posted 1,910 articles to date and the American Thinker, 921. Red State.com didn’t offer an aggregate number of its articles on a search, but has 39 pages to scroll through, and Watchdog.org, the news arm of the Franklin Center, has well over two-dozen pages.

Online, Government Isn’t Being Ignored

Online, reporters didn’t drop the story, as these numbers vividly attest.

These reporters didn’t accept at face value the government’s claims that no one was targeted on the basis of their political or religious beliefs. Rather, they pursued those claims and grilled government officials, to detail facts that proved otherwise. As Vox and RealClearPolitics, among others, noted, a full 83 percent, or 248 of the 298 applications “flagged” between early 2010 and May 2012, were filed by conservative groups — as were 100 percent of those subject to audits — compared with 9% of liberal groups. The IRS crackdown snared a few liberal outfits, sure, but almost by accident, said Reason.com, much “the way tuna nets catch an occasional dolphin.”

Online, investigations are continuing into government harassment and bullying, from wide new media coverage of the ACLJ lawsuit filed on behalf 41 Tea Party and conservative groups from 22 states, to Watchdog.org’s extensive series of questionable “John Doe” investigations by prosecutors into former aides and associates of Gov. Scott Walker of Wisconsin (see “Wisconsin’s Secret War“).

Online, the abuse that results from the misuse of power is being debated and challenged — because online, new media reporters aren’t “losing interest” in the government’s use of tax power to suppress free speech, political or religious affiliation, and public assembly.

So, before the next quiz, you might want to check for news where it’s most widely and usefully being reported — online.

Search Engines to the Rescue of Investigative Journalism

Monday, February 9th, 2015

“The advancement and diffusion of knowledge is the only guardian of true liberty.” – James Madison, fourth President of the United States and author of the First Amendment to the U.S. Constitution guaranteeing freedom of speech and of the press.

The rise of search engines have given us the ability to advance and diffuse knowledge more rapidly than ever before. After all, we all use the Internet to find a definition or to learn more about issues and stay up to date on current events.

Future of News

Marc Andreessen (coauthor of Mosaic, the first widely used web browser, and cofounder of Netscape Communications Corporation) recently wrote an article titled “The Future of the News Business: A Monumental Twitter Stream All in One Place.” Andreessen wrote that he is the most optimistic person he knows regarding the future of the news industry. He feels there are three main factors at play:

1  Distribution, moving from locked down to completely open.

2  Competition, moving from narrow segments to everything is open.

3  Market size, growing by leaps and bounds around the world.

Andreessen further pointed out that the first two factors drive prices down while the third factor greatly increases volume. Given these factors, he feels that the opportunity for the overall news business is huge.

His next insight offers an intriguing business perspective. Andreessen notes the relatively small amount of money that is at play in the news business relative to other industries. He feels it is a simple problem to resolve, suggesting that a big opportunity exists to fund investigative reporting via philanthropy and even crowdsourcing. Andreessen goes on to note that despite $300 billion in philanthropic activity in the United States, the news industry does not tap into nearly enough of this funding source.

Andreessen concludes by discussing business models and suggests that the wall between content and advertising must be torn down. We can hear the gnashing of teeth and rending of garments from the old-line journalism crowd. Yet from a true business perspective it all needs to be about delivering value to your audience.

Search engines get this difference and are delivering that value to their reader, or what we call “viewers.” When a viewer goes online to search for a topic or news item, they also get served links—or information—to make associated purchases. Search engines deliver more value to their viewers. 

Death of News

Well, if Andreessen is optimistic about the news industry, Robert G. Kaiser is not. In his recent article “The Bad News About the News” published by the Brookings Institution (a non-profit public policy organization based in Washington, DC), this retired editor of the Washington Post cites a litany of woes and notes a key recipient of the benefits of this change—search engines.

Kaiser states that advertising revenue of all United States’ newspapers in 2000 was $63.5 billion, and by 2013 had plummeted to $23 billion. On the other hand, the most popular search engine’s advertising revenue has moved from $70 million in 2001 to $50.6 billion in 2013.

Advertising Revenue

Newspaper advertising works on the broadcast principle of shipping everything to the broadest audience. On the other hand, search engines and other digital properties can target ads to people who are seeking a particular item. Advertisers get to optimize their investment through different types of behavioral targeting that can really make an impact on sales. In this way, search engines deliver greater value to their advertisers.

Kaiser offers further insight about newspapers and their advertisers who have yet to fully embrace digital marketing. He points out that Americans spend about 5% of their media time with magazines and newspapers, yet nearly 20% of advertising dollars still go to print media. Kaiser goes on to project that when these advertisers start awakening to the advantages of digital marketing, the shift of advertising dollars will be even greater.

Kaiser also reports that the number of journalists at United States’ newspapers has moved from 59,000 in 1989 to 36,000 in 2012. That has to hurt from the perspective of someone who has built his career at the top of that industry. You can understand still more of this downside at Newspaper Death Watch or by reviewing the Wikipedia list of defunct newspapers. 

Newspaper Reporters

Creative Destruction

It all adds up to yet another example of Joseph Schumpeter’s “creative destruction.” Schumpeter’s concept builds on the original work of Karl Marx, stating that capitalism must destroy and reconfigure previous economic orders to clear the way for the creation of new wealth. Here we are seeing the old economic model of newspaper and television broadcasting up against the Internet’s ability to “narrow-cast” information to smaller and smaller groups.

As the stories above demonstrate, those small groups, or even single individuals, have interest in specific news about their industry segment and/or communities but also expect to be served options on how to respond. Advertisers who are savvy enough to know who to target, what channel to use to reach them, and even the subjects of interest to those they are trying to reach, can readily fill this void. Search engines have built the delivery systems for advertisers and online news outlets that are fully engaged in “creative destruction.”

Franklin Center’s Role in the New Media Landscape

We will admit that we are right in the heart of the “creative destruction” of the traditional media order. Yet we began this journey–and continue to this day–defending the critical need for investigative reporting at every level of government. We are particularly focused on statehouse reporting, as that is where traditional media have retreated the farthest and, therefore, where the need is greatest.

Can search engines come to the rescue of journalism? Certainly the model of online narrow-casting and delivering value to the viewer is front and center for content delivery. Yet, we would argue that the need for sound investigative reporting, watchdog reporting, if you will, remains somewhat outside the mainstream of the economic factors at play in the creation of this new order. That is why we are a non-profit, generating funding from like-minded individuals and organizations to drive serious investigative reporting at every level.

You can learn more about how the Franklin Center is working in this new world of online journalism here. You can also find our top local stories that have been picked up by national media here.

Franklin Center bloggers amplify school choice

Tuesday, February 3rd, 2015

School choice is more than just an academic subject. School choice–the right of parents to choose the best education options for their children–is an issue that touches the lives of families across America.

This past weekend, 40 bloggers from across the country gathered in the nation’s capital to see that firsthand at the Franklin Center’s AmplifySchoolChoice conference.

On the first day of the conference, attendees visited two schools in the DC area.

First, bloggers visited Archbishop Carroll High School, a Catholic school that serves many underprivileged students. Some of the school’s top students gave tours of the school, allowing conference goers the chance to see students and teachers hard at work. Later on, a panel of students answered questions. One student explained that he travels more than an hour to get to school each day.

Many students at Carroll are able to attend the school thanks to the DC Opportunity Scholarship Program. Originally signed into law and later defunded by President Obama, the program was reauthorized by Congress in 2011.

Bloggers next visited the middle school campus of Achievement Prep, a top-rated charter school in Southeast DC, serving students in grades 4-8. Achievement Prep scholars–as they refer to their students–are nearly twice as likely to be proficient in math and reading than other students in the District of Columbia.

The goal of Achievement Prep is to prepare its scholars for high school and beyond, which they achieve by creating an environment that fosters a love of learning. Susan Cannon, the school’s Chief Academic Officer, told the bloggers about a parent who said her child used to not know what he was doing next weekend, but now he’s talking about where he wants to go to college. That kind of change is common with Achievement Prep scholars.

Throughout the rest of the conference, the bloggers heard from experts in the field of school choice.

On day one, Moriah Costa of Watchdog.org and Andrew Clark of IJReview discussed their ideas for reporting effectively on school choice. Additionally, Dick Komer of the Institute for Justice gave his take on school choice as one of the leading litigators of the school choice movement. Bloggers tweeted his remarks as part of an interactive “tweet-up” using the hashtag #AmplifyChoice.

U.S. Senator Tim Scott surprised the bloggers by joining the conference via Skype to explain to the audience why he supports school choice.

Later on, Robert Pondiscio of the Thomas B. Fordham Institute discussed the importance of curriculum, Gina Mahony of the National Alliance for Public Charters explained the importance of charter schools, and in one of the highlights of the conference, Robert Enlow, President and CEO of the Friedman Foundation for Educational Choice, gave his take on the issue and interviewed a parent and student of Archbishop Carroll High School.

The mother and daughter discussed how the DC Opportunity Scholarship Program and other forms of school choice have made a major difference for their family.

On day two of the conference, bloggers learned about bipartisan outreach from Joe Williams of Democrats for Education Reform and Virginia Walden Ford of the Friedman Foundation for Educational Choice. Later they got tips on marketing school choice from Greg Reed of the Institute for Justice, Matt Frendewey of the American Federation for Children, and Tanzi West of the Black Alliance for Educational Options.

Next Ben Scafidi of the Friedman Foundation for Educational Choice explained the economics of school choice. His research shows that school choice programs can actually save the government money, contrary to the refrain from school choice opponents.

To close out the conference, Don Soifer and Naomi DeVeaux of DC Public Charter School Board discussed their role in bringing greater choice to DC-area parents. As an independent authorizer, they can approve charter schools without much interference from the government. In many jurisdictions, the local school board holds the power and refuses to approve charter schools.

By the end of the conference, the bloggers were motivated to amplify School Choice: by blogging, tweeting, and more.

School choice certainly affects students and their parents, but it affects us all. What will you do to Amplify School Choice?

For more on school choice and to read the work of bloggers who attended the conference, check out AmplifySchoolChoice.com, a project of the Franklin Center.