For a while, the Trump administration at least claimed to have a theory.
When it first started hurling taxpayer dollars at private companies, the justification was national security. Semiconductors, rare earth materials, and supply chains were too important to leave to detached market forces. That standard was always elastic. With enough imagination, any business can be rebranded as strategic. But at least the administration purported to draw a line: these extraordinary interventions were confined to essential industries and existential threats.
Now comes Spirit Airlines, and the line has vanished.
According to multiple reports, the president is considering a $500 million rescue package that could eventually leave U.S. taxpayers owning close to 90 percent of Spirit after it emerges from bankruptcy for the second time in as many years. Battered by competition, mismanagement, and soaring fuel costs, Spirit has been unable to find a private rescuer on acceptable terms. So what? A budget carrier selling cramped seats to Boise and Reno isn’t a strategic national asset. If a twice-failed small airline qualifies for de facto nationalization, almost every business does.
This isn’t about national security; it’s about politics. The president has mused about rescuing the struggling airline to protect competition and save jobs. That sounds appealing to people who like jobs and cheap tickets, which is to say, almost everyone. But the question isn’t whether competition is good. Of course, it is. The question is who decides which competitors survive and which fail: market participants or politicians.
For decades, Republicans had a simple answer. Washington shouldn’t be in the business of picking winners and losers. That wasn’t a talking point; it was central to the right’s case against industrial policy and progressive corporatism. To their credit, some Republicans still seem to mean it. Senator Ted Cruz called the proposed Spirit bailout an “absolutely terrible idea,” emphasizing that “the government doesn’t know a damn thing about running a failed budget airline.” Senator Tom Cotton noted that if potential investors don’t believe Spirit can be run profitably, there’s no reason to think the U.S. government can do better. Too many others on the right, however, remain conspicuously silent.
That silence matters because once the government starts taking equity stakes in ordinary firms based on political considerations, any limiting principle evaporates. There will always be another inconvenient bankruptcy, another company hit by rising costs, another lobbyist insisting that, in this particular case, failure is unacceptable. Once that becomes the standard, the only test is whether a company is sufficiently well-connected.
This is how moral hazard spreads in the real world. If the government socializes Spirit’s downside, what lesson will other firms draw? Not that they should operate more efficiently, fortify their balance sheets, and prepare for volatility. The smart play, in such a world, is to run thin, hope for the best, and cultivate political patrons. Why hedge fuel costs or maintain a strong balance sheet if your failure would be politically unpalatable?
Sure, it’s economically inefficient; but it’s also civically corrosive. One virtue of the free market is that it separates political power from economic power, allocating capital according to expected returns, not partisan convenience. Once the government becomes a major investor, that separation erodes. In Spirit’s case, the government that regulates airlines, controls airspace, and subsidizes airports would be the airline’s principal source of capital. Does anyone believe Washington would resist the urge to meddle?
Of course not. Politicians would pressure the airline to keep unprofitable routes alive for political reasons. They would require labor concessions, dictate pricing decisions, and demand symbolic gestures. This is not speculative. In September 2025, the Trump administration used its “golden share” veto right over U.S. Steel to block the company from closing an unprofitable plant in Granite City, Illinois, for transparently partisan purposes. That is what happens when the state can influence a business: commercial decisions transform into political ones.
And the distortion won’t be confined to Spirit. Its rivals will find themselves competing not with another marginal discounter, but with a carrier backed by the U.S. government and directed, at least in part, by people whose primary concern is the next election. At that point, the debate ceases to be over the parameters of the free enterprise system and becomes a fight over which politically favored firms reap the benefits of corporatism.
This is what makes the Spirit proposal so dangerous. The administration’s earlier market interventions were bad enough when wrapped in the banner of “national security.” At least officials claimed they were dealing with unique threats to the country. Extending the same logic to a twice-bankrupt budget airline is something else: an open-ended mandate to take an interest in any politically useful firm.
Defenders of the Spirit deal will protest that this is overwrought, that the immediate issue is jobs and competition, not the fate of the liberal order. That is how corporatists always sell their proposals. The slow erosion of a market economy never announces itself. It arrives one exception at a time, each defended as temporary, practical, and too urgent to worry about principle.
If Republicans are serious about resisting a lethargic European-style corporatist arrangement in which the state treats businesses as appendages of policy, this is the time to say so. If they don’t, they will have given away the argument they once claimed to care so much about. And they will leave their successors a powerful instrument, with no good faith way to object when it is turned against them.
Source:
www.commentary.org
