DALLAS - The U.S. Treasury Department is injecting billions of dollars into the country’s 10 largest airlines. Secretary Steven Mnuchin has floated the idea of funneling money to oil producers, too, according to Bloomberg, after crude prices plunged. As the economic crisis brought on by the Covid-19 pandemic drags on, other industries will go hat in hand to the government. Not all of them deserve equal treatment.

One central question is how essential each industry is to individual Americans. Employment is key. As well as transportation and oil, gas and mining, take finance, hotels and restaurants, retailing, and entertainment. Of those six broad groups, the retailing business keeps the most Americans on the payroll – nearly 16 million – with hotel and food services a close second according to the Bureau of Labor Statistics.

But there are other considerations. The money companies put back into the system matters. Those that invest the most should help employ more people in other industries, and finance, including insurance and real estate, ranks at the top of that list. Businesses with lesser capital expenditures can funnel cash back into the economy by paying more of their profit as taxes. In this category, finance stacks up well, but airlines also pull their weight.

A sector’s size relative to economic output matters, too. Financial firms received large sums of money in 2008-09 in part because they were so essential to the U.S. system. They remain the biggest industry considered in Breakingviews’ new bailout meritocracy. Size is not everything, but it does matter to the impact of any problems on the country’s growth. Significance to national security is another criterion for bailout merit.

Not all the metrics are perfectly illustrative. For example, airlines are represented by the broader transportation and warehousing category for which more data is available. The ranking for national security, meanwhile, is a yes-or-no assessment, with the decision grounded in U.S. Homeland Security descriptions.

The quickest way to stave off a downturn may be to help everyone and accept that some undeserving candidates will benefit. Longer term, a more discerning approach could pay off. Banks are worth backstopping, but oil and gas companies may not be. The Breakingviews ranking can be realigned. Chances are, plenty of tweaks will be made among lawmakers, too.

CONTEXT NEWS

- U.S. Treasury Secretary Steven Mnuchin said he is considering a government lending program for U.S. oil companies looking for federal aid, Bloomberg News reported on April 23. Oil prices have crashed as demand has shrunk due to lockdowns during the coronavirus pandemic.

- Ten U.S. airlines plan to participate in the U.S. Treasury Department’s Payroll Support Program, the agency said on April 14. The companies include: Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines. The airlines will receive loans and grants which in part have to be repaid as their businesses are shuttered due to the Covid-19 virus.

(Editing by Richard Beales and Amanda Gomez)

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