On 12/29/12, President Obama signed HR 4310, the 2013 National Defense Authorization Act. Section 1078 (thomas.loc. gov/cgi-bin/query/z?c112:H.R.4310:) of the bill authorizes the use of propaganda inside the US, which had previously been banned since 1948 when the Smith-Mundt Act was passed.

History of Section 1078:

1) First version of NDAA is proposed, does not include domestic propaganda legislation (3/29/12)
2) Domestic propaganda legislation introduced by Rep. Thornberry as stand-alone legislation not related to NDAA, HR 5736, entitled ‘Smith-Mundt Modernization Act of 2012.’ Defeated in committee vote. (5/10/12)
3) Exact text of HR 5736 introduced as Section 1097 of third version of NDAA, which was approved by the house. House sends bill to Senate. Section 1097 is entitled ‘Dissemination Abroad of Information about the United States.’ The text of this Section 1097 is virtually identical to that of HR 5736, except one word is removed (see below)*. (5/18/12)
4) NDAA referred to Senate. Section 1097 appears in fourth version of bill, ‘Referred in Senate’ version. In this version, there is a Section 1078, listed as ‘Authority for Corps of Engineers to Construct Projects Critical to Navigation Safety’ (6/19/12)
5) Section 1097 does not appear ‘Public Print’ version, nor does Section 1078. There is no section regarding ‘Dissemination Abroad of Information.’ (12/4/12)
6) In, ‘Engrossed Amendment Senate’ version, Section 1097 reappears as ‘Transportation of Individuals to and from Facilities of Department of Veterans Affairs.’ There is no section regarding ‘Dissemination Abroad of Information.’ (12/12/12)
7) Final version of bill is returned to House and Senate for re-approval. Section 1097 does not appear, and the ‘Transportation of Individuals’ clause does not appear elsewhere in the bill. Section 1078 reappears, now entitled ‘Dissemination Abroad of Information about the United States.’ The text of this Section 1078 is identical to the text of Section 1097 from the third version of the bill discussed in point #3. (12/21/12)
8) Obama signs this final version of HR 4310. (12/29/12)

That is the basic history of this bill. All information is sourced from Library of Congress.

*There is only one difference between the text of HR 5736 and Section 1078, and it is that the word ‘primarily’ from ‘intended primarily for foreign audiences’ appears in HR 5736 but is removed in Section 1078 of HR 4310 and the wording is ‘intended for foreign audiences.’

Below I’m going to paste the important parts of the bill’s text to help your writers. Bracketed text is mine. The beginning of the bill is misleading, and apparent reversals of clauses in it are made in subsequent subsections (however, if the reader uses a broad interpretation, they’re not really reversals, only expansions on the original meaning):

SEC. 1097. DISSEMINATION ABROAD OF INFORMATION ABOUT THE UNITED STATES.
(a) United States Information and Educational Exchange Act of 1948 [aka Smith-Mundt Act of 1948, which banned domestic propaganda]- Section 501 of the United States Information and Educational Exchange Act of 1948 (22 U.S.C. 1461) is amended to read as follows:
GENERAL AUTHORIZATION
Sec. 501. (a) The Secretary and the Broadcasting Board of Governors are authorized to use funds appropriated or otherwise made available for public diplomacy information programs to provide for the preparation, dissemination, and use of information intended for foreign audiences abroad about the United States, its people, and its policies, through press, publications, radio, motion pictures, the Internet, and other information media, including social media, and through information centers, instructors, and other direct or indirect means of communication.

[using a broad interpretation, 'intended for foreign audiences abroad' could apply to any material that could at any point after release be potentially made available to any person who lives outside of the US]
SEC. 208. CLARIFICATION ON DOMESTIC DISTRIBUTION OF PROGRAM MATERIAL
(a) In General- No funds authorized to be appropriated to the Department of State or the Broadcasting Board of Governors shall be used to influence public opinion in the United States. This section shall apply only to programs carried out pursuant to the United States Information and Educational Exchange Act of 1948 (22 U.S.C. 1431 et seq.), the United States International Broadcasting Act of 1994 (22 U.S.C. 6201 et seq.), the Radio Broadcasting to Cuba Act (22 U.S.C. 1465 et seq.), and the Television Broadcasting to Cuba Act (22 U.S.C. 1465aa et seq.). This section shall not prohibit or delay the Department of State or the Broadcasting Board of Governors from providing information about its operations, policies, programs, or program material, or making such available, to the media, public, or Congress, in accordance with other applicable law.
(b) Rule of Construction- Nothing in this section shall be construed to prohibit the Department of State or the Broadcasting Board of Governors from engaging in any medium or form of communication, either directly or indirectly, because a United States domestic audience is or may be thereby exposed to program material, or based on a presumption of such exposure. Such material may be made available within the United States and disseminated, when appropriate, pursuant to sections 502 and 1005 of the United States Information and Educational Exchange Act of 1948 (22 U.S.C. 1462 and 1437), except that nothing in this section may be construed to authorize the Department of State or the Broadcasting Board of Governors to disseminate within the United States any program material prepared for dissemination abroad on or before the effective date of the Smith-Mundt Modernization Act of 2012.

[Note that section B expressly allows the use of propaganda domestically, as long as there is some possibility that at least one non-US-citizen will eventually receive the given communication]

This bill appears to not only open the door to legalization of the dissemination of propaganda in America, but would also legalize covert infiltration of media organizations by government agents and even the creation of media outlets that legally operate entirely as government fronts.