[Schneed10]

I think you need a mixture of both, but I'd like to see it have a heavier slant to tax cuts.

On one hand, you can't go giving all the money to the taxpayers because consumer confidence is so low right now. That's a sure sign that many people would take that money and simply save it for a rainy day (ie job loss). If the money sits in people's savings accounts it will do little to create jobs.

But on the other hand, the government will not infuse the money in the most efficient manner. You have to ensure that lenders are solvent enough to confidently lend money - so I agree with bank bailouts. And you have to give a push to companies to incent them to pursue alternative energy sources - so I agree with building energy infrastructure. But bailing out Detroit? Bad idea in the long run; if GM is failing to compete with the Toyotas of the world, it's because of their own bad decisionmaking, and propping them up is only postponing their inevitable demise. The only reason to bail out Detroit? Millions of jobs depend on it, and if they go under, our unemployment goes up into double digits.

But governmental spending in the form of auto bailouts is the ultimate short-term, short-sighted fix. Taxpayers may indeed initially hoard a tax rebate as the consumer confidence index indicates, but over the next two years most low-income households will spend through that money, gradually infusing it back into the economy. They'll have little choice, because in the face of rising costs they'll need to tap that money. That infusion of cash will help jobs and earnings pick back up, the stock market will begin to improve, which will ultimately spur improvement in consumer confidence. Low, middle, and high income households will begin ramping up their spending in kind as their fears begin to fade, and the economy will be back on track and humming along by the middle of 2010.