No, The Trump Administration Shouldn’t Bail Out Spirit Airlines
The article argues that the Trump administration should not pursue a roughly $500 million taxpayer bailout or other government rescue of Spirit Airlines. It claims such action would be bad economic policy because the federal government already faces massive debt and persistent deficits, making additional spending on a nonessential, non-national security-critical airline unjustifiable. The piece also contends Spirit is not a major carrier in terms of domestic passengers, and that the airline has already reduced flights substantially-suggesting its collapse would not produce a national calamity, especially since other airlines could acquire its profitable routes and assets.
It further argues the proposal would be politically risky for Republicans, drawing parallels to earlier high-profile bailouts that angered conservatives, and warning that voters frustrated by inflation could react similarly. The article also says a bailout would create a “precedent,” allowing future Democratic administrations to demand conditions and strings attached to government money-potentially undermining efforts to reduce “woke” or politically favored policies in the private sector.
while it acknowledges one cause of Spirit’s troubles-blocking of its merger with JetBlue by the Biden administration-it argues that avoiding a taxpayer-funded rescue is still the right approach. It concludes that Spirit should instead be allowed to liquidate or pursue a merger option that does not require public funds.
At a time when Republicans in Congress need to generate enthusiasm ahead of the November midterm elections, the Trump administration is contemplating a move that would undermine conservative support. The president’s talk of a potential $500 million bailout for a budget airline struggling to emerge from bankruptcy might preserve Spirit Airlines, but it would deflate conservatives’ spirit (pun intended) at a critical juncture.
The president spoke last Thursday of “helping them [i.e., Spirit] out, meaning bailing them out, or buying it.” But the government took stakes in private-sector companies during the Obama administration. It didn’t work out well then, and it won’t work out well now.
Bad Policy
The list of reasons not to bail out Spirit stands as long as an airport runway. Start with the federal government’s $39 trillion in debt and counting. With the federal government running deficits approaching $2 trillion every year, and lawmakers not showing any signs of taking the actions needed to resolve Medicare and Social Security’s long-term shortfalls, why on Earth should taxpayers throw good money on top of bad to save an airline?
On top of the argument against bailing out airlines in general, this specific carrier doesn’t represent an economically critical business, let alone a company with national security implications. Last year, Spirit flew 3.5 percent of passenger miles domestically, which ranks it only eighth nationwide.
As it pared back services to stay afloat, Spirit has reportedly reduced its scheduled flights from 19,575 last May to an estimated 9,353 next month. Those numbers raise an obvious point: If Spirit could cut more than 10,000 flights in the past 12 months without causing a national calamity — or indeed without generating much notice at all — then the disappearance of its remaining 9,353 flights should not cause any major incident.
But Spirit’s liquidation wouldn’t necessarily lead to the disappearance of all its flights, as other airlines can, and likely would, buy its profitable routes and planes. Contra President Trump’s claim that “I’d love to be able to save those jobs,” letting Spirit go into liquidation would allow other companies to purchase and run its usable assets, including its personnel, without injecting taxpayer dollars into a zombie company to keep it afloat.
Awful Politics
Conservatives have equally solid political reasons to oppose a Spirit bailout. We know how Republicans would react if the political roles were reversed. When President Obama gave bailout funds to American automakers, conservatives derided the actions of “Government Motors” for years, and rightly so.
Moreover, the White House appears not to remember the trap that George W. Bush laid for congressional Republicans 18 years ago: the trap of TARP, the Troubled Asset Relief Program. Coming in the fall of a presidential election year, the Wall Street bailout helped transform a middling-to-bad election cycle for congressional Republicans into a wipeout. Republicans’ catastrophic defeat in November 2008 gave Nancy Pelosi and Barack Obama the margins they needed to ram Obamacare down the throats of Congress and a skeptical American people.
With families still struggling under persistent inflation, using more taxpayer dollars to bail out poor choices by airline executives could engender a similar public outrage as TARP among the electorate. Unless Trump has a political death wish, he would steer well clear of this type of golden giveaway.
Golden Rule
Last and most certainly not least, a bailout of Spirit Airlines would beget Washington’s version of the Golden Rule. To wit: He who has the gold makes the rules.
Donald Trump may love the thought of personally rescuing Spirit Airlines now, but it would set a bad precedent that Democrats could use in the future. One can easily see a Democrat administration using the Trump precedent not just to bail out an airline but to attach myriad strings to the taxpayer bailout — e.g., the airline must have a unionized workforce, engage in “sustainability” practices, and/or participate in other government-favored behavior, to receive taxpayer funds.
The Trump administration has spent the past 15 months trying to eradicate woke practices from the private sector. Setting a precedent for more taxpayer-funded bailouts would allow a Democrat president to leverage bailout funds and undo all that work.
Just Say No!
The Trump administration rightly identified one major source of Spirit Airlines’ problems. As a White House spokesman noted, “Spirit Airlines would be on a much firmer financial footing had the Biden administration not recklessly blocked the airline’s merger with JetBlue” in 2023.
But one bad government action by the Biden administration should not lead to a second by its successor. Spirit Airlines can liquidate or engage in a quickie merger with JetBlue that does not involve the injection of taxpayer funds. For both good policy and political reasons, Washington should not try to buy or run any of the nation’s airlines.
Chris Jacobs is founder and CEO of Juniper Research Group and author of the book “The Case Against Single Payer.” He is on Twitter: @chrisjacobsHC.
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