In the bailout state, the federal government takes over failed private entities in order to maintain overall economic stability. Sometimes the companies already had ties to government, such as Fannie Mae and Freddie Mac, the Government Sponsored Enterprises (GSEs) that the Treasury seized--sorry, "took into conservatorship"--last summer. Sometimes the bailout state's beneficiaries are businesses like AIG, Citigroup, Bank of America, and the other financial institutions wedded to government through the Troubled Asset Relief Program (or TARP). Other times, the beneficiaries are unions: the United Auto Workers (UAW) whose members' jobs at Chrysler and the "new GM" will survive thanks to government largesse.
The wards of the bailout state have more in common than government support. After all, the government has supported the railroad, agriculture, and steel industries for a long time. But not through direct bailouts. No, the salient feature of the bailout state is government ownership and control.
Read the rest of Matthew Continetti in The Weekly Standard.