By this logic, any loan anyone has ever taken has been a bad idea.
Obama could create new entitlements that burden America for generations. The money could be used to prop up failing businesses, creating a situation where success is determined by who has the best lobbyists.
Not every loan is a bad idea, but plenty of them are. There is no guarantee the effect of this loan will be positive.
This is like in the prisoners dilemma, but you force the American people to not rat anyone out - so the corrupt businessman can get all the benefits at the cost of the American people.
Also, who are we taking a loan from? China already owns most of America; now the Federal Reserve is just printing more money to make it look like the government can spend the money - but the reality is, it is just a redistribution of wealth from those who hold cash (middle class, and rich people can invest in other assets) to whoever the government mandates "needs" it. (The way they define needs, is if you are so bad at running your business it is on the verge of bankruptcy, so you need a ton of cash to go have a relaxing vacation costing millions.)
You've presented a possible reason why borrowing money to bail out corporations could be harmful, but you haven't demonstrated that it's worse than the alternative. Sure, bailouts are bad. So are depressions.
Answer: As of November 19, 2008, the total U.S. federal debt was $10.6 trillion.[2], with about $37,316 per capita (that is, per U.S. resident). The October 3rd, 2008 bailout bill (H.R.1424), section 122, raised the U.S. debt ceiling from $10 trillion to $11.3 trillion. Of this amount, debt held by the public was roughly $6.3 trillion.[3] In 2007, the public debt was 36.8 percent of GDP [4], with a total debt of 65.5 percent of GDP.[5] The CIA ranked the total percentage as 27th in the world.[6]
36.8% of our GDP. Okay. How are we paying that off if every year the deficit only grows?
In addition, you said depressions are bad but they happen. And yes they're market failures and natural periods of economic purge.
But bailouts are different - they basically stop that market failure that should have happened to happen. A bailout is a subsidy. Then companies that shouldn't be able to compete continue to do so, and that leaves room for more problems in the future.
36.8% of GDP payed back at 1% per year would be (Interest - inflation - 1%) = ~.03 * 36.8 = 1.14% of GDP. Which is bad but below the average annual increase in GDP over the last 30 years. The deficit would increase every year, the debt would increase every year, but debut as a percentage of GDP would decrease.
One of the failings of democracy's is it's so easy for people in office to pay for current spending by increasing debt and then pass the buck to the next administration. The real story about the deficit is graphing as a percentage of GDP over time, doing so tells a different story than you might expect. http://zfacts.com/p/318.html
PS: A little blast from the past http://usgovinfo.about.com/library/weekly/aa101500b.htm