Some have opined that getting money into the hands of consumers in the form of tax cuts would be a more effective way of stimulating the economy than the government spending on things like roads, bridges, schools, the power grid, etc.

Let's look at the numbers. If the Congress approved a stimulus package of, say, $1 trillion, and that amount was simply divided up and given to tax payers in the form of either a tax rebate or a temporarily reduced tax rate for a couple of years, that means each of 300 million Americans would get about $3,300. A family of four would get $13,200. Spread over two years, that would be $6,600 per year.

Now the question would be, how would Americans spend that money? Would they spend it on things that would increase consumption of items that would result in increased production, thereby producing new jobs, and begin to re-start the U.S. economy? Or would they use the money in ways that does not increase demand, production and jobs?

If the pubic spent that additional money on things like new houses, new cars, new appliances for their homes, additions to their homes, new furniture, etc., there's a chance that the economy would be re-started. Those types of expenditures have a multiplying effect, increasing the business of all the suppliers of goods and services needed to produce and deliver those types of items. That type of increased demand would require increased production, creating new jobs, and producing more income--thereby re-starting the economy.

But if the public used the money to pay down existing credit card balances, buy lottery tickets, buy and consume groceries, take vacations, or even deposit the money in their savings accounts, the money would have little effect on increasing demand, production and the creation of new jobs. That type of use of the money would have little effect on demand, production and jobs.

So how would American families spend the additional $13,200 they'd be given over a two-year period? Would it be on things that would have the effect of stimulating the economy? Or would they spend the money on more frivolous things, or use it to pay off debt or save it?

Remember, it isn't likely that they'd be sent a check for that amount. That was tried last year and didn't work. Statistics show that most of the 2008 rebates were either saved or used to pay down existing debt, not to purchase new "things" to get the economy re-started. Should the Congress roll the dice another time with a trillion dollars? What if the public repeats what they did last year and the economy remains in the doldrums? Our national debt is approaching the same level as a percentage of GDP as it was during WWII, about 15% of GDP. Most economists believe that this trillion dollars is probably the last large amount that will be affordable for use as an economic stimulus.

So again, think about how the trillion dollars should be used. Is government at all efficient in spending money? No. But if they fund things like roads, bridges, schools, a power grid, etc., it's pretty certain that the money will be spent to hire the workers, buy and transport the materials to build those items, etc. There almost certainly would be a multiplier effect to those types of expenditures. And at least we would wind up with improvements to our infrastructure that will be needed in the future anyway.

So again, if the Congress approved a $1 trillion stimulus program and appointed you to spend it in a way that will have the highest probability of stimulating the country's economic engine, how would you spend it?

Remember, this is quite likely the last trillion dollars that will be available and affordable for such fiscal experimentation.

No more talking about who caused the current problem, how government has performed in the past, who's in the Congress that we like or don't like, which political party would do better than the other, or what the social policies of the parties are. There's no more time to talk about that stuff. We are facing a life-changing economic crisis which if not reversed will effect the lives of our children and grandchildren and largely dictate the role that the U.S. will play in the world. We're in a position right now where we have to play the cards that we've been dealt. We've been "called" and there aren't any more cards to be dealt. Are we all-in, do we fold, or is there something in-between?

What would you do?

P.S. Steve, I too want to know what happened to the initial $350 billion. But I also think there is a high degree of urgency to make decisions on what to do to stimulate our economy. For those who think we're being rushed to judgement, doing nothing until more hearings are held and facts become known might be appropriate. But for those who believe there's a degree of urgency, then the question I posed above is one that requires some thought.