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02.13.04
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ANNOUNCER: Tonight on NOW WITH BILL MOYERS… an inside look at right wing talk radio.

Watch what happens when a top-rated host spreads an unconfirmed rumor…

RADIO HOST: What do you think about that? Does the governor know about this?

ANNOUNCER: The power politics of talk radio.

And ten days after dirty dancing at the Super Bowl…

OSBORNE: The thing that really points our the culture war that we're in is thataA lot of people in the entertainment industry do not understand what the fuss is all about.

ANNOUNCER: Congressman Tom Osborne. A Bill Moyers interview.

And… how the tax code helps the rich get richer.

JOHNSTON: I don't believe if most Americans in the middle class had any idea that they're subsidizing the super rich, that they would be going around supporting these tax plans.

ANNOUNCER: Pulitzer Prize winner David Cay Johnston.


MOYERS: Welcome to NOW.

In one of the most famous stories in the Bible little David slays the giant Goliath with a slingshot. Not today. Not in our media world. Only the giants are left standing.

Consider this: four major companies account for half of the movie business. Six companies account for more than 90 percent of domestic music sales.

There are 2500 book publishers in America, but five produce most of the revenue.

Just two retail chains control nearly half of all retail book sales. Once upon a time a long time ago, when I was a kid, 80 percent of all the newspapers were independently owned. Today, more than seven thousand cities and towns have no locally owned newspaper.

And this week, Comcast, the nation's largest cable operator, launched a hostile bid to take over Walt Disney. If it happens, a single colossus would dominate cable distribution in eight out of the top ten markets, control ABC television and news, own the sports channel ESPN and scores of digital channels and…etcetera, etcetera, etcetera. The days are gone when content was king. Nowadays the guy who controls the toll booth rules the roost.

So what, you ask? Who cares who owns what and how much?

Well, Comcast is one of the largest purveyors of so called "adult content" in America. How long before Mickey Mouse is hosting reruns of DEEP THROAT and Snow White does Dallas? Remember what happened at the Super Bowl? We'll come back to that shortly.

BRANCACCIO: First, though, let's look…or, rather, listen to radio. As we've reported often here, the Telecommunications Act of 1996 doubled the number of local radio stations that a single company can operate in large markets and it also removed all limits on the number of stations that a single company can own nationwide.

Now just one company — Clear Channel Communications — owns 12-hundred-plus radio stations. Has that created more diversity in programming? More competition? That's what champions of deregulation have been arguing for years.

But would you believe that the last time we counted a few months ago, the 45 top rated talk radio stations across the country ran 310 hours of conservative talk each day and only five hours of views that were not rightwing.

To see how that plays out in just one American town, producer William Brangham and I went to the Pacific Northwest.


BRANCACCIO: Turn on talk radio nowadays and you'll hear a pretty consistent message.

O'REILLY: But the Democrats can't win unless they emphasize class envy.

HAMBLIN: They do what Democrats do. You know, they go crazy. They beat their mothers. They kick their dogs.

LIMBAUGH: 'Cause the liberal media has been the liberal media for as long as there's been the media...

BRANCACCIO: It's almost a mantra on talk radio today: liberals are either naïve or outright dangerous. Liberals own the mass media: the papers, the network news, NPR and the like. And so the only place you're gonna get the truth is right here on your radio.

HANNITY: You never hear liberals complaining about spending money anywhere unless of course, it has to do with our military.

BRANCACCIO: Talk shows on commercial radio tilt so far to the right it makes your neck hurt. But you knew that. What you may not know is that talk radio matters. A Gallup Poll finds that one in four Americans get some of their daily news from talk radio, double just five years ago. And as this political year gets rolling, it's important to understand a medium with the power to move elections.

We've come to Portland, Oregon —, a known hotbed of liberalism — and even here, you can do this little experiment: flick on a.m. radio and out comes a refresher course in the charms of conservatism, courtesy of nationally-syndicated stars like Rush Limbaugh, Sean Hannity, Michael Savage. By our calculations, about 85% of Oregon's talk shows are conservative.

And Oregon's also got some stand-out, home grown talent.

KXL PROMO CLIP: The undisputed #1 local talk show host in the Northwest! It's Lars! Lars! Lars!

LARSON: Good afternoon seven minutes after the hour. You've got the Lars Larson show...

BRANCACCIO: Lars Larson is the #1 rated talk show host in Oregon, and a highly influential player in state politics. Known for his sharp-tongue as well as his trademark .32 Beretta, Larson has the ear of nearly one in eight Oregonians.

LARSON: …about the vaguely French-looking, Botox-denying John Kerry winning, and saying that from his perch as "Mr. Theresa Heinz," heir to the Heinz fortune, worth about half a billion dollars, he will speak out against the privileged and the special interests, like he's not one.

BRANCACCIO: Larson has a slew of favorite targets, putting the skewer into everything from Oregon's Democratic governor to the state's biggest paper, which he calls 'the daily dead fish wrapper.'

Larson's current mission is to make sure a proposal to raise taxes in Oregon is stopped at the ballot box.

LARSON: The retroactive and non-withheld tax increase which if voted through on Tuesday is gonna be taken out of your hide because it has not been taken out of your paycheck.

BRANCACCIO: It's called Measure 30, and Larson wants it squashed. The media war being waged over 'Measure 30' provides a fascinating window into the role that talk radio plays in American politics.

Oregon's budget is a mess, hit hard by the recent recession. It's such a mess that last year, Republicans and Democrats in the legislature joined together and passed a bill, a tax increase to avoid deep cuts in education, health care, and other government services. For the average taxpayer in Oregon, the increase would've added about $70 a year to their taxes.

But then came the anti-tax activists. They gathered enough signatures to stop the tax increase, and instead, let Oregon's voters decide.

LARSON: Now you have all of these State leaders; legislators, heads of school districts, the governor, all advocating in favor of the biggest tax increase in State history. Knowing that the majority of their constituents — by one estimate early on, 70 percent — oppose it. Now this is why talk radio is becoming so popular. Is that government has become 'tone deaf.' Government can be told ten times, "don't do that!" And they do it anyway.

BRANCACCIO: The local press is full of stories about the drastic cuts that will have to occur if Measure 30 fails. Most newspaper editors have repeatedly urged Oregonians to bite the bullet and pass the tax increase.

But for Larson, their dire predictions have become the stuff of parody.

LARSON: You hear lots of "No on 30" talk on the Lars Larson show. We want you to hear one of the positive spots in favor of voting for Ballot Measure 30. Take a listen at this.

PARODY ADVERTISEMENT: If you don't vote yes on 30, we will throw your grandma into a snowbank without her meds. And all violent criminals will be released from prison and run amok in your neighborhood. Middle and highschools will shut down permanently, rendering your children to a sixth grade education. Your dog will hate you…This non-biased purely informational message has been paid for by your tax dollars. This is your last chance to send us more of them. Paid for by the "We Need Every Single Last Dollar You Have Committee."

LARSON: Now isn't that nice? Some of that non-biased information that they're putting out just purely for your information…

LARSON: This is what Oregon government does, it says, "Pass this tax increase or we'll hurt this old lady, we'll throw this little kid out of school, we'll take this person who's medically needy and we'll cut their medicine." It's the baldest form of extortion.

BRANCACCIO: But your heart doesn't soften when you hear police officers, health administrators say, "We really need this tax increase?"

LARSON: No it doesn't, and I'll tell you why. What the legislature did was it said, "We will cut the things people care the most about, and we will keep intact those things that if you put them up to a vote they'd go down in flames."

LARSON: Let's go to Steve in Tuolome. Steve welcome to the Lars Larson show.

SCHOPP: Hi Lars, another great show. I'll tell ya…

BRANCACCIO: Meet Steve Schopp, loyal Lars Larson listener. He's got a small construction business in Portland.

SCHOPP: What public officials knew this? And, and when did they know it?

LARSON: Once again, I'm going to bring up the fact that the Daily Dead Fish Wrapper buried this story.

SCHOPP: And this is a typical example of how talk radio fills the void, because this is the only place the conversation's happening.

BRANCACCIO: Schopp is a big consumer of news. He reads the local papers, watches TV news, and scans the Internet. But talk radio is the only place where Schopp feels he really hears the truth.

SCHOPP: I read the paper, the local… THE OREGONIAN paper every morning. And usually that starts me out with some aggravations because I know things to be different than what are reported on a number of issues.

BRANCACCIO: Schopp calls into Larson's show as often as he can. He usually listens in his truck, driving from job to job. Larson's callers have been aflame this week, talking about the forthcoming tax vote.

SCHOPP: There's been such an absolute media blitz in favor of higher taxation by every conceivable media source except talk radio that it's just been staggering.

BRANCACCIO: Now, it's fair to say that Steve Schopp was never going to vote for the tax increase. But media scholars say talk radio's real power is that it's viral, in the nicest possible sense of that word. Talk radio arms repeat listeners like Schopp with carefully selected facts and arguments for use on friends and family.

LARSON: Is the news media going to hold the governor to as close and account as a lot of Democrats like hold the President? I don't think so. Call 'em up! Challenge 'em! Twenty minutes after the hour.

BRANCACCIO: Is there a Lars Larson factor in politics?

LARSON: Sure, sure. If the fact is that to one adult in five in the state of Oregon, I present an alternate point of view, and that gets them to think a second time about whether to vote yes or no. Whether to vote one candidate or another, whether to believe what they're being told by their local government or not, yeah we do make a difference.

BRANCACCIO: The difference talk radio makes can also be heard three thousand miles away. In Palm Beach, Florida, the a.m. radio dial still sounds awfully familiar.

SAVAGE: Every stinking, rotten radical left winger in this country poses a far greater threat to your freedom than does al-Qaeda.

HANNITY: The regulations, the law, the Constitution means nothing to these Democrats when it comes to maintaining power.

LIMBAUGH: The people on the left hold that as a fundamental belief, that the people can't be trusted. The people aren't smart. The people don't have any judgement. I mean, that's the essence of liberalism in the first place…

BRANCACCIO: Palm Beach is the home to the godfather of right-wing talk, Rush Limbaugh.

But in this one radio market, if you keep listening after Limbaugh, you'll hear a rather different perspective.

RHODES: And in two sentences President Bush spent 2 trillion dollars, he talked about making the tax cuts permanent. That is a $1 trillion dollar proposal. And the other sentence was when he talked about privatizing social security, that's a trillion dollars.

BRANCACCIO: This is Randi Rhodes. That rarest of species: a host of an in-your-face talk show that is liberal. And number one in her radio market.

So much for the argument that you often hear that liberals can't make it on commercial radio because they're too namby-pamby, because putting a liberal on a talk station would be like playing Mozart on a country station.

RHODES: So the man stood there and spent 2 trillion dollars in under an hour! That was an expensive night, lemme tell you. I've never seen a woman spend like that! Even when she's in Hermes with her husband's credit card.

BRANCACCIO: Rhodes has tapped into an audience that commercial talk radio programmers usually miss. And Randi's opinions seem to connect with her listeners the same way conservative audiences connect with her competition.

RHODES: For people who are liberal or Democrats, when they hear me, the most often comment, the comment I get most is 'Oh my God. I feel sane. Nobody sounds like me." You know? "And then I found you, and I feel sane."

We're the only industrialized nation that doesn't consider health care to be a civil right. They don't consider 'health' to be a right, and yet they talk about 'right to life.' Look, they love the fetus, they hate the people.

BRANCACCIO: So, why then, is Rhodes' such a lone voice on the radio? There's one answer, which says the radio industry plays 'follow the leader' and with roughly 20 million listeners a week, that conservative named Limbaugh is the leader.

But Rhodes wonders, if it's all about ratings, which she's proven she can deliver, why won't her owners syndicate her show nationally? It is here, Rhodes argues, where politics really matter.

Rhodes' station, WJNO, is owned by the media giant Clear Channel Communications. She argues that if her show went national, her jabs at President Bush and members of Congress might make life uncomfortable for Clear Channel.

RHODES: The media is so corporate now and it's got so much business in front of the administration with deregulation and can you own newspapers, and can you own radio stations and television stations? Can you own radio stations, television stations and newspapers? How many can you own? Can you own all the newspapers in one town? They have so much business in front of Congress they're not gonna rock the boat.

So if they made a few million dollars off of me, nothing compared to what they're gonna make if they got deregulation the way that they want it.

BRANCACCIO: We asked Clear Channel Radio, and they said political considerations play no role in how they decide which hosts to promote. Rhodes has been in talks with a group called Progress Media - they're the startup liberal radio network that has comedian Al Franken on board. But that venture has yet to launch.

BRANCACCIO: But you're really arguing that these big corporations are sucking up to the powers that be by putting on…

RHODES: What other explanation is there?

I mean honestly, there's like five of us, six of us, and how do you explain that when there's 10,000 radio stations? How do you explain that the only people that get syndicated are conservatives?

LARSON: Welcome to the Lars Larson show…

BRANCACCIO: Not only do conservatives like Lars Larson get syndication deals — Larson got picked up last year and now airs in dozens of cities nationwide — but they're also actively courted by the current administration.

LARSON: I've got a whole list of… I've pulled some White House trivia because I think we can have some fun with that.

BRANCACCIO: Larson is broadcasting from Washington, D.C. today. He's been invited here by the Bush administration for what's called 'Radio Day.'

LARSON: Sir, could you please take us to the White House?

BRANCACCIO: Talk show hosts from around the country are coming to the White House today for some exclusive access to top administration officials.

LARSON: I feel like we hit the lottery because the White House let us know last week that we will have on our interview list, confirmed, Elliot Abrams, Sean O'Keefe the NASA administrator, Andrew Card, the White House Chief of Staff, Tom Ridge, the Homeland Security Director, and Donald Rumsfeld. And it just doesn't get much better than that.

BRANCACCIO: Even though it's quite rare to get interviews with anyone from President Bush's cabinet and campaign, they've been frequent guests on local talk radio shows across the country.

The White House refused to give us a list of which talk show hosts were invited to Radio Day. They wouldn't let us film inside.

But judging from Larson's interview with Secretary of Defense Donald Rumsfeld, there were chummy, conservative-to-conservative moments.

LARSON: My wife says she loves you more than she loves me.

RUMSFELD: Oh give her a hug for me, will you?

LARSON: I'll do that.

BRANCACCIO: A few days later, however, Larson is back on form.

Measure 30 — the state's big tax increase — is proving unpopular in the polls. Larson's pounding away at it daily. And within a week of the vote, he gets handed a fresh piece of ammunition.

LARSON: Welcome back to the Lars Larson show. We've a big surprise for you before the top of this hour, now…

BRANCACCIO: He gets a call from a group called 'Citizens for a Sound Economy.' They're a national anti-tax group headed by the former Republican majority leader, Dick Armey. The group played a key role in getting Measure 30 on the ballot in the first place.

WALKER: The governor's working on a plan, Lars, he's already come up with a plan to come up with half a billion dollars.

BRANCACCIO: The group's spreading a rumor that Oregon's governor is sitting on a stash of 500 million dollars. But the governor's been saying he's broke. If it's true, it could deal a mortal blow to the push for the new tax increase. It is an explosive tip. And Larson knows it.

LARSON: If the governor really knew, or knows today, about an extra half-billion dollars…

Well whadya think about that - Does the governor know about this?

He knows where there's a half billion dollars, 500 million to fill that budget hole…

BRANCACCIO: With no proof whatsoever that the allegation is true, Larson is running with it.

LARSON: And I want to see if the governor is gonna come clean on this, maybe the information is bad…

Call up every one of your local TV stations, your favorites, call up your daily local newspaper, your daily dead fish wrapper.

BRANCACCIO: Larson's producer comes in during a commercial break with news that listeners are doing what he asked, they're calling other media urging them to pick up on the story.

TAYLOR: KTOO called and they said, call off the dogs, their phone lines are ringing off the walls.

LARSON: So they're gonna call the Governor's office and ask about the half billion?

TAYLOR: Yeah, yeah. They're gonna check it out.

BRANCACCIO: With a good rumor, timing is everything. In this case, just a few days before the vote.

LARSON: By the way, we're hearing from a number of the TV and radio stations, and um, maybe even the newspapers that some of them will start looking into the claim that the governor has found an extra half billion dollars which he plans to make public after the vote.

BRANCACCIO: Larson provides the fuel the rumor needs, repeating it all afternoon long. Even the governor's denial isn't enough to stop it.

GOVERNOR'S SPOKESPERSON: No, we do not have a half a billion dollars, we haven't found any money.

LARSON: Alright, so that's her answer, there's no extra money. The official denial from the Governor's office. Wonder how long it will take them to find it?

BRANCACCIO: Eventually, Oregon's biggest paper, THE OREGONIAN, feels the need to weigh in, printing an editorial that the allegation is 'flatly untrue.'

On February 4th, it was official. Voters rejected Measure 30.

LARSON: Congratulations to all of you for joining with those people in Oregon who knew that the wrong medicine for this state.

BRANCACCIO: Larson is triumphant; six in ten have voted against the tax increase. Oregon now faces new cuts to schools, health care, police, and prisons. And to date, no hidden half billion dollar stash of money has been discovered.


ANNOUNCER: There's more to come on NOW. How the rich leave the rest of us holding the bag at tax time.

JOHNSTON: We are shifting the tax burden of the wealthy and onto the middle class and the upper middle class.


MOYERS: Let's move now from talking about content on radio… to content on television.

The flap over the Super Bowl halftime has resurrected television as America's campfire, something everyone's talking about.

In these polarized times, I never thought I'd see the day when liberals and conservatives in Congress would agree on anything, but lo and behold, quicker than you can say ABC-NBC-CBS-CNN-FOX-TURNER-TIVO-COMCAST-DIRECTTV-HISTORY AND A&E — all those guys — a consensus has emerged that something's rotten in TV land. So it was a sight to behold on Capitol Hill this week.

Democrats and Republicans alike, indignant, shocked, and sorely vexed, that what they had let out of the cage to grow like Topsy has become a virus contaminating America's morals.

The Senate and the House summoned the Federal Communications Commissioners to a hearing to demand something be done.

The House also asked the big media moguls to come. But only one showed up.

NOW's Peter Meryash went, and produced this report.

MOYERS: It was the hot topic of conversation in living rooms across the country. You've no doubt seen it by now, a mere three quarters of a second at the end of the Super Bowl half-time show, the most watched television program of the year.

And this week, it was the hot topic on Capitol Hill.

REP. WILSON (R-NM) : The playground at our elementary school should have been abuzz with talk of the Patriots and their great moves on the field. Not the moves of some disrobing rock star.

MOYERS: The Senate and the House held separate, simultaneous hearings where members of both parties — liberals and conservatives — lashed out against what they see as over-the-top, sexually and violently explicit programming.

SEN. BROWNBACK (R-KS): We have this toxic entertainment media environment now in this country where you can't afford to let your children watch television for all the violent and sexual material.

REP. MCCARTHY (D-MO): I'm a civil libertarian, and proud of my defense of the 1st Amendment. But I am really concerned about the abdication by the broadcasting industry and what it has meant for viewers.

MOYERS: At the center of the firestorm was Mel Karmazin, President and C.O.O. of Viacom, one of the country's media giants. Viacom is the parent company of both CBS, which aired the Super Bowl, and MTV, which produced the half-time show.

REP. WILSON: Viacom's support of shock jocks and allowing tasteless Super Bowl programming is a nationwide entertainment industry scandal.

MOYERS: Like many members of Congress, Heather Wilson, a Republican from New Mexico, was particularly upset this all happened during a broadcast that attracts viewers of all ages, including her young son.

WILSON: You knew what you were doing. You knew what king of entertainment you're selling. And you wanted us all to be abuzz here in this room, and on the playground in my kid's school, because it improves your ratings, it improves your market share, and it lines your pockets.

MOYERS: Viacom's Karmazin was apologetic, but said an internal investigation has shown that no one in his company was involved in the stunt.

KARMAZIN: Everyone at Viacom, everyone at CBS, and everyone at MTV was shocked and appalled and embarrassed by what transpired. Ms. Jackson's unrehearsed and unapproved display went far beyond what are acceptable standards for our broadcast network.

MOYERS: But many members of Congress said this goes far beyond what happened at the halftime show. Republican Congressman Chip Pickering is the father of 5 boys, and he grilled Karmazin about the ad which ran during the Super Bowl promoting another CBS program.

PICKERING: A woman comes through the kitchen, and there's a 7 or 8 year old boy at the table. The woman just has a tee-shirt on. She reaches into the cabinet and exposes her entire back end to an 8 year old boy. And that's in prime time, supposed to be family hour sitcom.

MOYERS: It seems to be part of a trend. General Electric's NBC has had its own indecency problem, when the popular singer Bono used the "F" word during last year's live broadcast of the Golden Globes.

In fact, according to a Gallup Poll taken after the Super Bowl, 75 percent of those Americans asked thought the entertainment industry needs to make "a serious effort" to significantly reduce the amount of sex and violence in movies, television shows and music.

GREEN (D-TX): The large concern is the overall programming I consider is going down the tubes. On TEMPTATION ISLAND you can watch couples cheat on each other. And on WHO WANTS TO MARRY A MULTI-MILLIONAIRE, marriage is equal to greed all during the so-called family hour on broadcast TV.

MOYERS: Local broadcasters have been saying the same thing.

Jim Goodmon, a broadcaster in North Carolina told us he's concerned that big networks can and will pressure local stations to carry network programming, even if the local stations don't think it's right for their communities.

GOODMON: FOX told us that they were gonna do a program, MARRY A MILLIONAIRE, parade 50 women across the stage in bikinis, and the man would choose somebody, and they got married. I mean, a real marriage. And we said, "No. We're not gonna make fun of marriage. We're just not gonna do that.

What I would like to have as an environment when there are a lot more people, independent owners that can say that.

MOYERS: But it's just the opposite. Independent broadcasters have been disappearing as big broadcasters gobble up smaller ones in the rush toward media consolidation.

And it's been the Federal Communications Commission, under the direction of Chairman Michael Powell and its Republican majority, that's gutted the rules and cleared the way toward more media consolidation.

The two Democrats on the FCC say it's gone too far.

COPPS: I pleaded before we voted on media consolidation last June 2nd, we owe it to our children, let's look to see if there's a connection between the rising tide of consolidation and the rising tide of media indecency. And we did not do that, and I think it was a disservice to our kids.

ADELSTEIN: Just today we heard about Comcast trying to swallow Disney. So it's swallow or be swallowed. How do you avoid being swallowed? You get your stock price up so you can swallow somebody else. How do you do that? It's quarterly results. You have to make as much money as you can every quarter. How do you do that? If it takes pandering, if it takes crassness, if it takes making people eat worms on TV, if it means having people dance in lewd ways, whatever it takes, apparently, these broadcasters are willing to do it. So, there may well be a connection there.


MOYERS: Watching those hearings, you could believe that politicians finally get it. All these years, they were taking down the barriers to bigness, letting fewer and fewer conglomerates gobble up more and more, and all the time the big media were racing to the bottom, dumbing us down, coarsening the conversation, littering the public comment in order, as you just Commissioner Edelstein say, "To give investors greater profits."

Now liberals concerned about monopolies and cartels are talking about standards and values and conservatives devoted to market forces are asking, "At what price do we flip the other way?" Both sides now see the connection between the concentration of ownership and the content of what we see, hear and read.

One of those conservatives is a grandfather like me, and like me, he was brought up short at what his grandkids saw watching that Super Bowl half-time.

Many of you will remember Tom Osborne as one of the most popular and successful coaches in the history of college football. During his 25 years at the University of Nebraska, he led the Cornhuskers to three national championships. When he retired from football, he was promptly elected to Congress from the state where he is a fourth generation native and from whose university he earned a doctorate in educational psychology.

Tom Osborne is co-chair of a new bi-partisan media caucus in the House of Representatives that's irate over sexual and violent content in the media. Congressman Osborne, welcome to NOW.

OSBORNE: Well, thank you very much, Bill. It's great to be with you.

MOYERS: You said the other day, and I'm quoting you, that, "Members of Congress need to recognize the direct connection between the concentration of broadcast ownership and the declining standards of decency and diversity in the media." What brought you to that conclusion?

OSBORNE: Well, I think that the Super Bowl-- we had Viacom who owned CBS who had the telecast. And also-- controlled MTV.

So it wasn't a tremendous stretch to realize that-- the telecast of the football game might also get hooked up with MTV at the halftime.

And I think the thing that really points up to the culture war that we're in is a lot of people in the entertainment industry do not understand what the fuss is all about. And yet I think what happened was all of a sudden-- the average American family got hit right between the eyes with a cultural phenomenon that's affecting our kids all the time. And they really didn't like it coming into their living room at the halftime of a Super Bowl.

So I think that there have been a number of proposals in Congress at the present time that are aimed to correct some of this. Obviously, Fred Upton's bill to increase the fines against indecent speech on the radio. And the television--

MOYERS: And that pass--

MOYERS: That passed his subcommittee yesterday I believe.

OSBORNE: Yeah, it got out of the subcommittee and it hasn't gone to the full committee. And Doug Ose has a bill that would have eight indecent profanity words. So that no matter whether you use them as an adjective or an adverb or a pronoun or whatever 'cause as you know the FCC when Bono came forth with his four obscenities on a primetime said, well they were not gonna do anything because they he used it as an adjective.

Now, that was preposterous. And I think it was that event right there that began to galvanize some folks in Congress. So, a lot of things are starting to happen.

MOYERS: Do you believe that stiffer fines alone are enough to deter these companies? 'Cause the amount of money people are talking about on the Hill is, you know, pocket change to these big giants.

OSBORNE: Well, if the $27,500 which is currently what the fine is pretty insignificant. If you raise it to 275,000 it becomes more significant. And then if it's 275,000 per event, not just per show, then it becomes more significant. But the big hammer I think, Bill, has to be suspension of licensing.

And, you know, we had all of those complaints, 240,000 last year and only three citations. And never has the FCC done anything to even make a move at suspending a license. And I think until that happens we're not gonna see a whole lot of movement in the entertainment business.

And so I'm hoping very much that we do see some suspensions. And I think the FCC is beginning to come around a little bit. We've had a guy there, Michael Copps, who's been very outspoken on this issue. One of their commissioners, I've worked with him quite a bit. But we've had a hard time with the overall FCC Commission to actually address this issue.

MOYERS: That FCC Commission has a majority of Republicans. I mean, it seems to me that they might get the lesson now since it's Republicans in the House such as yourself who are leading this charge.

OSBORNE: Well, I-- this is an issue where I don't care whose party is involved, Bill. I think it's so important to our young people and the future of this country really hinges on our young people. And, so I don't think that censorship is the way to go. But certainly you've gotta have some standard.

MOYERS: I was talking yesterday to Congressman Bernie Sanders of Vermont. He's an Independent. He's not a member of your caucus, but he shares many of your concerns.

And he says he thinks fines are just treating the symptom and not the cause of this problem. Do you agree with that?

OSBORNE: I would agree, Bill, that the fines are not the whole answer. I think really the public outcry that has resulted primarily because of the Super Bowl has maybe raised awareness. But, as I said, I think there is a culture clash.

And, one thing John McCain is talking about is unbundling of the cable networks where you wouldn't have to have all 60 cable networks in your home.

If there's three or four that you don't like you can eliminate them. That's one possibility. And we so we see there's a lot of proposals out there that may help.

MOYERS: The new FCC rules on ownership allows one conglomerate to own up to three television stations, eight radio stations, the major newspaper and the cable system in the same city. I mean, isn't that enormous power to give one big corporation over the lifeblood of a community?

OSBORNE: Right. That is. And I believe there is a currently a stay that's holding implementation of that particular ruling up in the courts. And, obviously, some of the local outlets, if they're owned or controlled by a large conglomerate, when that large network decides to put something on that's risqué or inappropriate for local programming that local station manager has very little ability or at least he feels a tremendous amount of pressure not to take that off the air. So the more ownership by networks, the more problem we're gonna see with local responsibility in terms of taking the material off that just shouldn't be there.

MOYERS: You know, the Senate by a big majority voted to nullify those new FCC rules. And it passed what's called a resolution of disapproval and sent it over to the House. Do you believe the House of Representatives would pass that resolution of disapproval if it has the chance?

OSBORNE: I sure hope so. I, for one, will do what I can. And I think we'll be able to get some other folks together. And I think it'd be fairly bipartisan.

MOYERS: Over 200 members of the house have put themselves on record as saying they wanna vote on that resolution. But your own party leadership, Speaker Hastert and Majority Leader Delay, refuse to bring it to a vote. I mean, if Congress were serious about standards of decency wouldn't the vote on nullifying the new FCC rules send a message to big media?

OSBORNE: Yes, it would. And, of course, what it requires now is what's called a discharge petition. And those are things, Bill, as you know from being somewhat astute politically when you sign a discharge petition you're essentially going against your leadership. And you better be dead set committed and willing to pay the price to do that.

So I would hope that our leadership might relent on this issue. If necessary then there may be a discharge petition. And, of course, there's a fair likelihood that that might happen. So we'll see. But I think the next couple of months will be rather pivotal in this whole argument.

MOYERS: What is your take on the Comcast proposal this week to take over Disney?

OSBORNE: Well, it's a concern, you know, similar to what we've been talking about because-- it also would include ESPN. So it would give a tremendous amount of pipeline, the ability to deliver, plus programming which Disney offers. And so the ability to affect public thinking, information that goes out to the public in an editorial way would be tremendous.

And I guess my initial reaction being somewhat of a neophyte in this field would be to oppose something like that. And, of course, Michael Powell, the FCC chairman, has said that this would be vetted. That it would be looked at very carefully.

And I think that as I said the field has shifted, and I do believe that there will be much greater scrutiny given to this than there has in the past.

MOYERS: Congressmen Tom Osborne from Nebraska, thank you very much for joining us on NOW.

OSBORNE: Okay, thank you, Bill. It's been a pleasure to be on here.


ANNOUNCER: Next week on NOW: Were protestors calling for an end to unfair trade practices assaulted by the police?

KILLMON: They had weapons pointed at us so I got down on my knees. So the next thing I knew it was either a foot or a knee that was put in my back and I was forced onto the ground at which time they did handcuff me.

ANNOUNCER: Miami. November 20, 2003. Ordinary citizens become enemies of the state.

KESSER: They were shooting. And they weren't shooting at people's feet. They were shooting at people's heads.

ANNOUNCER: The crackdown on dissent…next week on NOW.


ANNOUNCER: And connect to NOW WITH BILL MOYERS online at pbs.org.

Find out what they're talking about on talk radio. Who should decide what's indecent? Tell us what you think. Compare your tax bill to that paid by big corporations.

Connect to NOW at pbs.org


BRANCACCIO: Now we turn to kitchen table issues. In the past couple of weeks, most of us have gotten our W-2 forms, the first step in preparing tax returns. Chances are you'll pay less this year.

President Bush has slashed taxes across the board for both individuals and corporations.

BUSH: We cut taxes on everybody. Sometimes in Washington you see them play favorites, so-and-so gets a tax relief and so-and-so doesn't. My attitude is, if you're going to give tax relief, you ought to give it to everybody who pays taxes.

BRANCACCIO: And lots of people do get tax relief…just different amounts.

If the cuts are made permanent, middle income families can expect to pay about $655 less each year. Now compare that to the top one percent of households, which would get a $58-thousand dollar tax break, nearly 90 times larger, that according to the Tax Policy Center, a nonpartisan think-tank.

And then there's the small print in the budget submitted last week to Congress. An accountant looking at page 377 would find a little something for people who buy Hummers and other hefty SUV's. They would be able to deduct 100-percent of the cost in the first year if they use the vehicle for business.

Here to talk about all of this is the NEW YORK TIMES' Pulitzer Prize-winning financial reporter, David Cay Johnston.

He spent nine years working on his new book. It's called: PERFECTLY LEGAL: THE COVERT CAMPAIGN TO RIG OUR TAX SYSTEM TO BENEFIT THE SUPER RICH AND CHEAT EVERYBODY ELSE.

David Cay Johnston, thank you so much for joining us on NOW.

JOHNSTON: Thank you, David.

BRANCACCIO: Taxes are a bit like getting your teeth cleaned every six months at the dentist. You don't like going but what has you so upset about them?

JOHNSTON: Well, taxes are necessary to have a society. You know, I don't like taxes anymore than anybody else. But you know what? I love America. I am so glad that I was born here and born in the time that I was. And if you're gonna have America you have to have taxes.

BRANCACCIO: You have to pay for America.

JOHNSTON: You have to pay for America. You have to have political stability. You have to have courts that are honest. You have to have police to enforce your contracts and the law on the street. And highways and public education and sewers. All wealthy societies have substantial taxes.

You go to a place like Honduras or Afghanistan, one of the things you notice is they don't have a lot of taxes. And they don't have a lot of public services. And they don't have a lot of wealth.

BRANCACCIO: And we have substantial taxes all right.

JOHNSTON: Americans pay very substantial taxes. But you also get things back from it. It isn't like the government takes the money and puts it in the ocean. We have all sorts of things that government provides us with through our collective action of paying our taxes.

BRANCACCIO: So we all pay. But what's the problem?

JOHNSTON: Well, Oliver Wendell Holmes, the jurist, said 80 years, "The taxes are the price we pay for civilization." There are a lot of people who want to have their civilization on a discount or free. They want all the benefits of America. They want you to pay the bill.

So if they can rent a mailbox for their corporation in Bermuda and pay the Bermudan government $27,000 and stop paying the US government $40 million, that's fine with them. You know, if a few people cheat, just a few, nobody notices. If cheating becomes widespread and rampant then there's no party for anybody.

BRANCACCIO: Which gets us to your main point, though, that there is a basic unfairness to who is paying what and the percentages that different groups in society pay.

JOHNSTON: Everybody in America has heard again and again from politicians and the news media the rich pay most of the taxes. That's true and it's misleading. The rich pay most of the income taxes.

JOHNSTON: The top 1 percent make a little over 20 percent of the income. They pay about 37 percent of the income taxes. But what percentage of their income? How many pennies on the dollar do the rich pay in taxes? And what's happening over time to their burden?

The 400 highest-income people in America made $174 million each on average in the year 2000. The top tax rate was almost 40 percent. What did they pay? Twenty-two. Twenty-two cents on the dollar. And had the Bush tax cuts been in effect, they would have paid 17 1/2 cents. Everybody else in America paid, on average, 15.3 cents.

Now, in 1992, the top 400 taxpayers in America paid 26 cents. Four cents more out of each dollar. And the rest of us, we paid 13 cents. Two cents less. So. Our tax burden has risen. Those at the top, it's come down. We are shifting the tax burden, through a whole variety of strategies, off the wealthy, and onto the middle class and the upper middle class in America.

BRANCACCIO: How'd it get that way?

JOHNSTON: Well-- most people, if they ever meet their Congressman or Senator, it's in a shopping mall or a coffee shop, where they go in there and go, "Hi, I'd like your vote. I'm running for office." If you're a donor, you get to sit down with your Congressman. Maybe with staff of lawyers and advisors, or people you've hired to representative you. And explain what you need.

And classic economic theory says that if you're a member of Congress, and you need these donors to get re-elected, you're going to respond to what they need. So, the tax code is full of all these provisions that are special pleadings for this person, and that person, and another person. Judicial Doctrines. And then on top of that, we've basically stopped auditing high-income people.

Because America now has two tax systems, separate and unequal. One for wage-earners. We take the money out of your check. We know how much you made. We know how much your mortgage interest deduction was.

BRANCACCIO: Not a huge debate about the wage-earning's taxes.

JOHNSTON: You effectively taxed. You can't cheat `em. People, however, who are very wealthy. Business owners, landlords, investors. They control what the government knows about them. We've radically reduced audits of these people. Many of them now use strategies like multi-layered partnerships, where the odds of one partnership being audited are one in 400. So, if you funnel your money through a six-layer structure, the odds fall away to nothing.

And so, a lot of income isn't being reported. Think about if the Mayor of your town told the police department, "Stop investigating robberies," and take the detectives, and put them on the parking ticket squad. What do you think would happen to robberies?

BRANCACCIO: So, the whole system of audits tends to, what? Turn a blind eye to the people at the top of the income scale.

JOHNSTON: We only have 12,000 auditors in the IRS. Back in the late-'80s, we had more than 16,000. There's a lot more people in the country now. There are a lot more wealthy people in the country. Furthermore, we focused the auditors on a trivial pursuit, for chiseling by people like you and me, who can cut a little of the corners, but can't really cheat.

Then there were Congressional hearings, that were… intimidated the IRS. And Congress passed a law that said if you could do any of ten specific acts, and work at the IRS, you must be fired. They include violating someone's civil rights. And very aggressive taxpayers — people who really don't want to pay — they have their professionals threaten these people.

This has turned into a sword being used, to by aggressive taxpayers to intimidate the IRS, and to intimidate the first-level supervisors.

BRANCACCIO: There's a whole other realm of income, that often affluent people can use, what, to get out of paying taxes?

JOHNSTON: Well, let me give you… use an example here of CEOs. You read about a CEO who made $105 million for a single year's work. He may have only paid $1.7 million in taxes immediately. He takes $5 million to support his lifestyle, and he pays the taxes, $1.7 million.

He takes the $100 million, and defers it. He leaves it on deposit with the company. He doesn't pay taxes on it. The company invests that. It grows on his behalf. When he retires, he takes the money. And he pays taxes at that point, which may be years down the road. Now, all the other senior executives do this, to varying amounts. It may go all the way down to managers making these little… these $55,000, who put away $5000 this way.

The company has to not only put away for the CEO the $100 million. But it doesn't get to deduct that, because it didn't pay it. So, it has to pay $35 million more in federal income taxes.

BRANCACCIO: So, the shareholders are paying this bill.

JOHNSTON: Maybe the workers get the bill. Because when you add up all this money that's sitting in these deferred accounts that hardly anybody knows about, and there have been executives who have built up billion dollar untaxed fortunes this way, what the companies do is they go to the rank and file.

And they say, "You know, David, you and the other guys, you worked here a long time but we can't afford your healthcare plan anymore because of competitive pressures. We can't afford your pension plan anymore. Or you're going to have to move to a 401-K plan. You can save for your retirement instead of having a pension that adds to your salary."

And it's being driven in good part by these executive deferred compensation programs. Now, some executives have discovered that if they don't want to pay taxes on the money when they get it, they exchange their deferral account for life insurance. And when they die the life insurance proceeds flow untaxed to their children.

BRANCACCIO: But as your book says, perfectly legal. What's to be done?

JOHNSTON: Well, I… that's… principal reason I wrote this book is that I don't think what Americans know about their tax system has anything to do with the reality of it. I've been doing investigative reporting for most of my 37 years and I never understood our tax system. I knew what politicians said about it.

I knew little tips in the newspaper about how to save $5 on your tax return. I wanted to know how does it work in the real world. And the fundamental thing I've learned is that the members of Congress who are passing these laws don't have any idea about their impact. I mean, what their belief about how the tax system really works has about as much to do with reality as my third grandson's belief in Santa Claus.

BRANCACCIO: So even members of Congress don't fully understand the bigger picture here?

JOHNSTON: Even members of Congress on the Tax Writing Committees don't understand this. There are some who do in both parties. But both parties set this system up. And it's being driven heavily by the people who have access.

You know, every politician will say to you, "You can't buy my vote. All you get is access." But access gets them what they want which is laws written to benefit their interests, in many cases very obscure hard to read laws. And how many people sit down and actually read the tax code?

JOHNSTON: Now, I don't in the book advocate that we keep our current tax system or we adopt any other one. What I try to do is explain to you how the tax system really works. The issues around the alternative tax systems. Because if people understand the principles of what's going on in the world of tax then out of all of our collective wisdom if we spend a little time being citizens I think we can get a better tax system.

One of the things I am in the book is critical of the middle class and the upper middle class for withdrawing from politics. I think people spend too much time worrying about who was Jennifer Lopez dating last night instead of keeping our democracy alive so that we create a better world for our children or our grandchildren.

BRANCACCIO: Now, reading your book I was particularly horrified by the notion that a lot of the promised tax cuts that have been promised in this latest round of tax cutting may not actually end up in the pockets of the good middle class people who think they're gonna benefit from them.

JOHNSTON: One of the salient features of the Bush tax cuts as opposed to the ones we've had prior to this time is that the tax cuts for the very wealthy become more and more valuable over time because of the nature of their design. And for the middle class, less value. If you are a married couple you make $75,000 to $100,000 a year. You have two children.

There is a 97 percent chance by the end of this decade that you will lose some of your Bush tax cuts. And almost half of that group will lose all of their cuts because of another tax that was passed in 1969 initially called the Alternative Minimum Tax or the Stealth Tax. It was put in place because in 1966 155 people who made the equivalent of $1 million a year now paid no federal income tax.

BRANCACCIO: 155 people.

JOHNSTON: So they pass this law to try and make sure very wealthy people can't pay zero taxes. Over time Congress has let it morph into a very different tax. And in 1986 to plug a small hole in the transition from the old tax system to the reforms that were adopted that year they added to the list of things that you can lose as exemptions and deductions under the tax. Your exemption for yourself, your spouse, your children, your state property taxes, your state income taxes and some medical bills.

Even the standard deduction. The most passive thing you can possibly do.

And this tax now, remember, was for people who make the equivalent of $1 million or more. It hardly applies to anybody making that kind of money anymore.

BRANCACCIO: And as we move forward, 2006, 2007, 2008, more and more middle class people will have to reckon with this thing.

JOHNSTON: We are going to shift this so tremendously that the upper middle class group, who now pay about 20 percent of the taxes are gonna pay 27 percent of the taxes. And they're going to pay a big chunk of the Alternative Minimum Tax. And if we go way beyond the years of projections that are made eventually the middle class all end up on the Alternative Minimum Tax if Congress doesn't fix it.

The problem with fixing it is they've spent the money. They spent it on tax cuts for the super rich and to get them as big a cuts as they possibly could they shifted all sorts of middle class people onto the Alternative Minimum Tax to subsidize the super rich. How are we gonna pay for it?

BRANCACCIO: So when, for instance, the Bush Administration says that this package of tax cuts will cost X amount of money this assumes that the Alternative Minimum Tax remains in play?

JOHNSTON: That exactly assumes that. And-- David, there's one thing I want to be real clear about this. President Bush's plans simply take an idea that began with the Democrats and he runs with it. Both parties are involved in this. This is the party of money in Washington where the super rich have access, real access, and you and I don't.

BRANCACCIO: Broader picture, though, on this. Is it really significant for our democracy that there's this transfer of burden for paying taxes to the middle class?

JOHNSTON: Oh, it's terribly important. You know, every society in history that's lost its tax base doesn't exist anymore. And there's no written in stone guarantee that this wonderful country will always exist. We have to work at it to make it exist.

If we shift the burden as we're doing continually off of the people who already have enormous wealth onto the people who are in the middle class and the upper middle class, what we're doing is we're punishing strivers. We're punishing people who say, "My life is not just about accumulating wealth." Which… there's nothing wrong with that.

"But my life might be about public service. I want to be a police officer or a school teacher or a nurse." We are discouraging people and taking away their ability to save for the future. We are taking away their ability to finance education for their children.

When government imposes taxes it makes decisions about who prospers and who carries the burden. And Americans can choose to have a tax system where the middle class subsidizes the rich. If we want to do that, our Constitution, we ought to do that.

But I don't believe if most Americans in the middle class had any idea that they're subsidizing the super rich, that they would be going around supporting these tax plans.

But our politicians aren't telling them that. Our politicians are responding as classic economic theory says that they should be doing it, to their real patrons. And those are their campaign donors.

BRANCACCIO: The book is called PERFECTLY LEGAL: THE COVERT CAMPAIGN TO RIG OUR TAX SYSTEM TO BENEFIT THE SUPER RICH AND CHEAT EVERYBODY ELSE. David Cay Johnston, thank you so much.

JOHNSTON: Thank you.


BRANCACCIO: There will be more on taxes. Our friends at FRONTLINE have been investigating how corporations and the wealthiest Americans use tax shelters to cut their tax bill…or to even pay no taxes at all. "Tax Me If You Can" airs next Thursday night. Check your local listings for times.

MOYERS: That's it for now. David and I will be back next week reporting on what really happened in Miami.

I'm Bill Moyers. Good night.


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