Spirit Rescue Sparks Government Control Fears

Spirit Airlines Rescue Plan Sparks Fears Of Growing Government Control - Page 7

Experts warn that a proposed bailout of Spirit Airlines could encourage more struggling companies to seek federal ownership stakes to survive.

Spirit And Frontier Airlines Merge In $6.6 Billion Deal — Source: Joe Raedle / Getty

American companies seem to hate socialism until they need money.

According to NBC News, the Trump administration is mulling over whether or not the government should rescue Spirit Airlines with a $500 million deal that would give the struggling airline the money it needs to get out of bankruptcy, while giving the federal government 90% of the company.

Should the Trump administration do so, it would help travelers with one of the only low-cost options when it comes to flying. Experts warn that the handout could create a dependency on federal funds to maintain, and it could start a chain reaction of unsuccessful companies begging for federal dollars.

“This equity stake stuff has opened up a Pandora’s box,” Tad DeHaven, a policy analyst at the libertarian Cato Institute, told NBC News on Wednesday.

DeHaven noted that there is “a growing list of government-backed equity deals across a range of industries over the past year that signal a broader expansion of federal involvement in private and public companies,” NBC News notes.

Companies that have equity-sharing deals include: Nvidia, Intel, and AMD; mining firms such as MP Materials and USA Rare Earth; as well as nuclear energy companies like Westinghouse Electric Co. and U.S. Steel.

“Once you open that box,” DeHaven said, adding that it’s only a matter of time until “somebody is going to get in trouble, and they’re going to see that their [only] option to survive is to get money from the federal government.”

The possible bailout didn’t go over well in Washington with even Republican Sen. Ted Cruz, Tx., calling the move a “TERRIBLE idea,” in a post on X. Cruz chairs the Senate Committee on Commerce, Science and Transportation. Fellow Republican Sen. Tom Cotton of Arkansas also noted that it’s “not the best use of taxpayer dollars.”

The White House said it is continuing to look at all options and is monitoring “the overall health” of the U.S. aviation industry, NBC News reports.

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