Pros And Cons Of Corporate Bailouts

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A corporate bailout is defined as financial support to a company or country which is facing bankruptcy (‘Bailout”). The earliest example of a government program to help solve economic failure, would be 1933. Roosevelt held the gold confiscation to bailout the banks at the time. By having the collected a total 600 tons of gold it would create a credible base for the United States. The problem was once most of the American citizen’s gold was turned in, Roosevelt then raised the price from 20 dollars to 35 dollars an ounce. There were a few bailouts thought the 20th century, but the large bailout, considered to be the bailout of the American economy, was in 2008. On October, 2nd, 2008 the Emergency Economic Stabilization Act was put into effect. …show more content…
Whether corporate bailouts are constitutional, or not, is the most important argument that there is, regarding corporate bailouts. Proponents of corporate bailouts believe that they are constitutional. There statement is untrue. Corporate bailouts are unconstitutional in more than one way. Nowhere in the constitution does it give the power to the federal government to spend taxpayer dollars, to help out private companies that are in distress. The constitution definitely doesn’t give them the authority to take over, and own, private financial institutions. Also the fact that congress went through with the bailouts without the proper authority is unconstitutional in its self. Congress can’t just act on what they think is the right thing to do. That’s just not how the American government was set up to work. An argument that proponents of the bailout is that all of this could be done lawfully by using commerce power. “To legitimately invoke the commerce power, Congress must show not only that a federal program is necessary, but also that it is proper-that is, the program does not violate other foundational principles, such as federalism, separation of powers, and limited government. Congress has not made that showing.” In conclusion, not only are corporate bailouts unconstitutional, there illegal and these bailouts should have …show more content…
An alternative is one of two or more available possibilities. This is an important argument because if there was a better solution to the problem that could be implemented in place of a bail out then it needs to be proposed. Proponents believe that there are no better solutions to deficits. There statement is untrue. Corporate bailouts are not the only solution, and they are, without a doubt, not the best. There has actually been a kind of a competition since 2008 about plans that would have worked better, and still been legal to implement, in place of the bailout. There are many good ideas that would have worked expediently better then what actually took place. One plan was that, current president candidate, Berny Sanders. He proposed that the bailout should be paid for by the rich. The plan would put a temporary tax on the all people that have an income of over one million dollars, and then break up the companies that were considered too big to fail to open up the free market more. James K. Galbraith, an economist came up with a plan to get rid of the cap that the FDIC (Federal Deposit Insurance Corporation) can insure of 100 thousand dollars, and then put 500 billion into the FDIC’s account. The systemic financial threat, would dissolve with this solution ("Five Alternative Bailout Plans”). With just these two solutions it is easy to conclude that there are many better alternatives to

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