Company Bailouts Aren’t Always the Best Medicine for the Economy

Covid-19 will cause some companies to fail and will push entire sectors to the brink. The question is how much the federal government—and, by extension, the American taxpayer—should do to rescue companies felled by the economic effects of the virus. It’s treacherous territory. Bailouts of financial institutions damaged by the 2008 crisis provoked populist anger on the left and the right. Donald Trump owes his presidency in part to the public’s revulsion over taxpayer funds going to Wall Street while ordinary citizens suffered.

Now it’s the Trump administration that has to decide which companies and sectors merit help, how much, and in what form. On March 10 the president pitched Republican senators on economic relief for the travel and hospitality industries, Lindsey Graham of South Carolina, who attended the meeting, told Bloomberg News. Graham said Senators John Hoeven of North Dakota and James Lankford of Oklahoma suggested a federal bailout for the shale drilling industry. (Lankford later denied in a tweet that he supported a bailout.) “I don’t know at this point if that will be in any final package,” Senator John Thune of South Dakota said.