It's not that simple; every company pays a lot in taxes, so the government doesn't benefit more than if a random VC had put the money in instead.

There's also the opportunity cost of the investment; the yield has to be compared to things like food stamps, education, basic research etc. There's a lot of low hanging fruit a well run government could be picking.

I would also tend towards the view that if the government invests like a VC it should take equity. If these companies genuinely have no other option, I don't see why this would be a deal killer. If they have VC they could take instead, the government shouldn't be offering free money.