Is the fact that a name is racist a good reason to cancel or refuse trademarks for it?

The US Patent & Trademark Office recently cancelled the trademarks for the Washington Redskins on the basis that the name is "disparaging to Native Americans." Putting aside whether or not it's a good idea for a business to have offensive terms in their trademarks, was this a good decision for the government to have made? Or does this bring America a step toward having thought police? If it was a good decision, by what basis could the government objectively determine whether or not a term is offensive and cannot be trademarked? In general, by what principles do you think the government should guide their decisions about trademarks?