A government bailout is necessary for an era of economic uncertainty and myriad political issues facing corporations. Fiscally stressed companies that are highly participative in job creation, revenue generation, and corporate social responsibility should be protected from bankruptcy. For example, Trump’s administration pledged a $ 25 billion bailout to 10 Airlines on the verge of economic crisis due to the Coronavirus Pandemic (Rappeport and Chokshi, 2020). I believe that the U.S. government is responsible for ensuring that companies operate in a conducive environment, free of external threats such as diseases. Therefore, the government should provide the necessary financial aid if pandemics or crises cripple a sector or corporation. I think that bailout is a positive action that benefits the company and the government in the long run. When an industry is self-sufficient or can sustain its operations, the government gains from regular revenues from taxes and legal fees.
When the U.S. government bails out struggling companies, it invests in the future by promoting economic sustainability and mitigating risks such as financial depression. The government will gain from funds, bonds, and stock transactions if the bailout is in loans. In my analysis, I discovered that the government issues bailouts primarily to protect its interests. Companies that qualify for stimulus payout must be large multinationals that support the government financially and politically. For example, the U.S. government covers the airline industry because it generates a lot of revenue and maintains a social status amongst international corporations. The low-interest loans or favorable terms enable affected companies to re-organize and effectively compete with global markets. Government bailouts protect companies from insolvency, even though sometimes they support unsustainable business models and misappropriate taxpayers’ money.
References
Rappeport, A. & Chokshi, N. (2020). Crippled airline industry to get $25 billion bailout, part of it as loans. The New York Times. Web.