It is a market distortion. It favors the industry that is getting government support, taking away valuable resources from other industries that would do better in a free market.
Practically, HN is pro-engineering, so we likely approve of such moves. Similar subsidies in other industries might not be viewed as favourably.
Personally, I am not against it, because as someone who has many of his peers playing a zero-sum game in mathematical finance, I've seen some of the downsides the top talent being allocated where the free market desires them most.
It's not just a pro- versus anti-engineering issue. A lot of engineering fields are rigorous and difficult while not being very highly paid.[1] Part of the reason is the market distortion you point out: both on the demand side (e.g. aerospace is a heavily regulated industry with few opportunities to build "unicorns"), and on the supply side (e.g. the government invested heavily in churning out aerospace degrees during the Cold War).
[1] I made more money out of school in software, with no relevant degree, than I would have in aerospace, with a B.S. in the field.