Stop looking at models and equations and theoretical constructs for a while and look at the practical considerations of the stimulus package. I've been doing this sort of thing for quite a while and I'm convinced it's doomed from the start. If they feel the need to blast a trillion dollars into confetti, then tax cuts would make the most sense. Even if the public used the money to pay down debt, that would be a good thing as it would transfer the debt burden from the consumer to the government making the consumer feel a little bit like spending again.
This is a great idea. Kill two rabbits one arrow. Pay roll tax cut say 100% ( $trillion worth whatever) instead of $trillion stimulus, let people manage their own money, right away spend, buy ice-cream, condoms chocolates shoes etc.. Since they have extra money in their pocket without creating Federal Gov (States govs that matter)administration chaos let alone its costs. If people spend, it stimulate right way – lead to free market perfect competition. If choose stimulus $trillion and if let the public servant managing the stimulates process, that is going to crazy! Knowing public servants 9 to 5 mentality procession creates another crazy crazy. Even if gun point their head “fast faster” but then creates another layer! It will take ages before the economy response from a cold dark cave. Tax cut is most effective! Then Fed buys few channels on TVs and puts ads saying how good they are because huge tax cut so people are grateful for the Fed’s generosity, lick Uncle Sam’s stinking foot kiss his ugly duck lips saying how glorious his big huge ugly corn teethed smiling!
