There are two main reasons why the federal government should not bail out failing companies:
First, bailouts are unconstitutional.
And second, they reward companies that perform poorly, in effect penalizing better-performing companies that got no bailout.
That’s contrary to the free-market principle of letting companies rise or fall based on how well they perform, not on government favoritism.
But now, another reason why Washington shouldn’t prop up failing businesses has surfaced.