This is a guest post by David Westphal, senior fellow at the Center on Communication Leadership and Policy at the University of Southern California. He is the author, along with Geoffrey Cowan, of Public Policy and Funding the News, published this week by the University of Southern California’s Center on Communication Leadership and Policy.

For most of American history, the government has helped sustain commercial news businesses in two significant ways. It has offered steeply discounted mailing rates to newspaper and magazine publishers, and it has required government agencies and commercial businesses alike to publish paid notices in newspapers.

This government support, which has been fundamental to publishers’ economic success, is not well understood by many Americans because it clashes with the notion of an impenetrable wall separating government and the press, something like the church/state divide. In fact, this idea of a wall between press and government is a myth.

As recently as 1970, postal subsidies were reducing publishers’ costs by nearly $2 billion per year (in today’s dollars). Paid public notices have also been a huge boon for newspapers, pulling in hundreds of millions of dollars annually. These sources of support pre-date the American Revolution, and have been important pieces of the news industry’s creation and sustenance.

Now, though, magazine and newspaper publishers face the prospect of losing nearly all of that government assistance, even as they face growing threats to their survival. Most of the postal discounts have been eliminated because of the Postal Service’s financial problems; the 75 percent mailing discounts publishers once received are now down to 11 percent. Today, the public-notice revenue is endangered as well. Legislation has been introduced in at least 40 states to move these notices to the Web, a shift that’s all but inevitable and will drastically reduce this profitable business.

These developments are worth the attention of policymakers as they ponder a role for government in the decline of legacy news businesses. Is it the right course now for government to reduce its investment in news and information, at a time when publishers are struggling to keep their businesses alive?

This is among the questions raised in a new research report, “Public Policy and Funding the News,” published this week by the University of Southern California’s Center on Communication Leadership and Policy. The report is online at www.fundingthenews.org.

“The government has always supported the commercial news business,” the report concludes. “It does so today. Unless the government takes affirmative action, though, the level of support is almost certain to decline at this important time in the history of journalism.”

The report examines not only postal subsidies and public notices, but also the variety of state and federal tax breaks available to newspapers and magazines. Those tax breaks, most of which are offered by the states, reduce government revenues by nearly $1 billion per year.

It is not entirely surprising that the idea of absolute separation between government and the press has taken hold. It’s a notion many in the news business have nurtured. “Take money from the government? I don’t like to let anyone else pick up the check,” wrote Mizell Stewart III, editor of the Evansville (Ind.) Courier & Press. The same dynamic exists in the public broadcasting industry, which often seeks to minimize the amount of money it gets from the government. In fact, state, local and federal governments pay about 40 percent of public broadcasting costs, according to the Corporation for Public Broadcasting.

This disconnect between perception and reality complicates the question of what should happen now, when the digital revolution is upending the business model of some traditional news businesses. A robust political mindset – keep government out of the news business -- is firmly in place. But the reality is: Government has always supported the news business.

In our report, my colleague Geoffrey Cowan and I take no position on what new government subsidies for the news business should look like, or even whether they should be created at all. We note, for example, that we’re still early in a huge innovation cycle kick-started by the Internet’s growth. It might well be that the rapid development of new digital products will provide a news ecology that needs no contribution from the government.

But we don’t yet know whether that will happen or, if it does, how quickly it will take shape. At a minimum, democracy needs a good back-up plan, and that could involve government action. Our report notes, for example, that public broadcasting is one area where further investment might make sense, in part because public broadcasters have by far the highest trust levels of the American people. That, interestingly, runs counter to one of the often stated reasons for keeping government out of the news business: that Americans won’t trust a news organization that receives government assistance.

We suggest a simple and cautious framework for policymakers to consider as they move forward: First, do no harm at this time of revolutionary change; second, focus on innovation, noting the examples of government-assisted advances in satellite and Internet technology; third, if there are to be subsidies, they should be based on formulas as opposed to programs that create winners and losers.

Above all, we suggest that a reframing of the public debate is in order. For all of American history, government has been a supportive partner of the commercial news business. Should there be a new role for government now, it would be a direct descendant of that legacy.