Resolved: Federal Government Bailouts of Major Corporations Are Just

Like most people opposing recent government bailouts, Thomas Jefferson is turning over in his grave right now. It was Jefferson who said, "The government which governs best governs least." Because I agree that small government means big prosperity, I must negate today's resolution which states: Federal Government Bailouts of Major Corporations Are Just. The most paramount Value in today's round is that of: American Prosperity, defined as American's living in, or working to achieve a successful, flourishing, or thriving condition The Criterion which I will use to uphold my value is that of: Justice, defined as the administering of deserved punishment or reward. [www.dictionary.com] Justice is essential to American Prosperity because without the corporations receiving the punishment that they deserve, there is no way for Americans to prosper because the government will put our country into so much debt that there is no room for American's to prosper Definitions are available upon request: [on definitions page] OBSERVATION 1: the term bailout is a misnomer. Since congress is giving money to private corporations in exchange for stake in the company, meticulous oversight into its business, and regulatory control, the proper term is "not bailout" but "buy into". 1: BAILING OUT BANKRUPT COMPANIES THAT HAVE ACTED RECKLESSLY WILL ONLY CONTINUE SIMILAR BEHAVIOR IN THE FUTURE. (A) Government funding of private enterprise is always bad for the consumers. New York Times columnist Gretchen Morgenson asked "What are the consequences of a world in which regulators rescue even the financial institutions whose recklessness and greed helped create the titanic mess we are in?" (B) Bailouts set a dangerous precedent which will lead to the destruction of American Prosperity Hedge fund manager Bill Fleckenstein wrote over the past several decades, "Bailouts became bigger and bigger—as the feds tried to solve the problems created by too much easy money with more easy money." I have one simple question: Where does it end? (Pause) The government buys control of AIG, GM, Bear Sterns, Chase Bank, etc…etc…Where does it end? 2: There were other options that would have better allowed for the prosperity of America. (A) Chapter 11 bankruptcy was an alternate lifeline. Chapter 11 bankruptcy is a form of bankruptcy reorganization available to individuals, corporations and partnerships. It has no limits on the amount of debt. It is the usual choice for large businesses seeking to restructure their debt. The debtor usually remains in possession of its assets, and operates the business under the supervision of the court and for the benefit of creditors. The debtor in possession is a fiduciary (a person to whom property or power is entrusted for the benefit of another.) for the creditors. If the debtor's management is ineffective or less than honest, a trustee (The person who manages assets owned by a trust under the terms of the trust document. A trustee's purpose is to safeguard the trust and distribute trust income or principal as directed in the trust document.) may be appointed. The simple fact is that the government didn't completely consider all of it's options when selecting bailouts as a method of "problem solving." Chapter 11 would have allowed for companies to have their debt reconstructed, which would have allowed for better money management in the future. 3: BAILOUTS ARE AN UNCONSTITUTIONAL EXPANSION OF GOVERNMENT. (A) Government buying into private business violates the constitutional principle of "limited government" Thomas Jefferson said, "The government is best which governs least." The founding fathers of this country believed deeply that government was a necessary evil that should only perform certain limited functions such as maintaining a standing army and build interstate highways. They also believed very strongly that government should not perform functions for which it was not suited, namely—running a business. Because those in government power are inherently prone to corruption, inefficiency, and tyranny, the constitution writers put strict limitations on government, so call checks and balances. But, the bailouts are nothing more than foul expansion of government power way beyond what the founders envisioned. Lastly, just think of the government owned economy of the old Soviet Union and you will get a picture of where this is all heading. Do we really want to emulate and try to duplicate the economies of North Korea, and Cuba? Mohamed El-Erian, of the world's largest bond investor, PIMCO, says bailouts" critically undermine the sanctity of contracts and, at the very minimum, leads to a persistent increase in the risk premiums that lenders impose on all borrowers. In addition, there may be unintended consequences that erode the integrity of the market system."