The CARES Act passed in response to the COVID-19 crisis provides billions of dollars in industry-specific loans that will go to large corporations like Boeing and the major airlines. These provisions are part of a larger compromise that also puts important funds into the hands of individuals and small businesses. But one should not be fooled into thinking the provisions benefiting large corporations and their shareholders were a necessary part of a coronavirus bailout. Instead they go against the core principles that should guide policymakers in responding to a crisis of this sort.

As Eric Posner and I explained in a 2015 article, the guiding principles for bailout policy are relatively straightforward. To put it simply, a bailout should preserve value in the way that is as fair as possible to ordinary individuals while minimizing administrative costs. Thus, the principles fall into three buckets: value preservation, fairness, and administrative costs.

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