This chapter proposes an interactive propaganda model that accounts for a novel development in the role of media in a struggling American democracy, namely the co-production of systemic disinformation between government and media to influence public opinion and behavior. Using the coronavirus crisis as a case, we found that the interaction between the Trump administration and Fox News that produced persistent disinformation about hydroxychloroquine as a miracle cure for COVID-19 included four elemental processes: (1) both Trump and Fox actively monitoring the information environment to identify propaganda material; (2) Trump and/or Fox cueing the other with the manufactured disinformation; (3) both sides monitoring and amplifying each other; and (4) both addressing criticism and adjusting for areas of conflicting interest. Different from traditional propaganda as top-down communication that typically flows from government to media and other societal echo chambers, interactive propaganda may be a political communication pattern that marks a shift toward an illiberal regime where the state forms partnerships with the media to consolidate its rule.