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Today in the Wall Street Journal there is an outstanding editorial panning the notion of creating federal “incentives” for Hollywood.
I wrote about the imprudence of this policy last month in the California Post, arguing that President Trump should reject Hollywood’s request for a federal production tax credit. You can read that column here. [ [link removed] ]⁠ (There is a tight paywall at the WSJ - I paid around $40/month to subscribe so you don’t have to - LOL)
Now the Journal’s editorial board has weighed in, and I thought I would give you the short version of what it had to say.
The editorial, “Handouts for Hollywood—Really?”, starts with the odd political alliance behind the idea: Donald Trump and California Democratic Sen. Adam Schiff. Trump this week called on Congress to approve a federal production incentive. Schiff has been pushing essentially the same thing on Capitol Hill.
The Journal’s answer is pretty straightforward: Don’t do it.
Its case is that Hollywood has real problems, but subsidies do not fix them. The industry has been disrupted by streaming, changing consumer habits and high production costs. Movie ticket sales remain well below pre-pandemic levels. Labor costs matter. And states are already spending heavily to lure productions away from one another.
California is the obvious cautionary tale.
The Journal notes that California now awards $750 million a year in film tax credits, more than twice what it did in 2019, yet the state has still lost 19,200 production jobs.
New York is another example. It spent $1.2 billion on production subsidies last year and has nevertheless continued losing entertainment-production jobs.
At some point, that should tell policymakers something.
If California is too expensive for movie and television production, then make California less expensive. If American productions cannot compete on cost, then deal with the costs. A federal tax credit just shifts part of the bill to taxpayers while leaving the underlying problem untouched.
The Journal also notes the political irony here. Trump has landed on the same side of the issue as Schiff, one of his most persistent antagonists. Paramount Skydance CEO David Ellison has also reportedly lobbied for federal help.
Which raises the basic question: Why should federal taxpayers subsidize some of the wealthiest companies and producers in America?
They shouldn’t.
Trump was right when he said Hollywood has become a “complete and total disaster.” But being right about the problem does not mean every proposed solution makes sense.
On this one, the Journal has it right. Congress should leave the idea on the cutting-room floor.
My video take… (recorded last year…). This is opposing California’s subsidies for Hollywood (which there are now more of sitting on Newsom’s desk), but the points are still valid for the federal subsidy of Hollywood.

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