I don't see how this is a bad thing. Afterall, the Internet originally belonged to the US Defense Department, and large portions of it still do. I do not see why the US government should give away something that their citizens paid for through tax dollars.
You supposedly want smaller government. Why would you want the government to keep control of something so large and important as th Internet?
We're talking about the U.S. government versus an international organization.
The military is large and important.