Bernanke and Bush agree that our economy needs a stimulus. (Pelosi, Clinton, and Obama have also called for stimulus.) Basically, the proposal is to add about $100 billion in spending to our roughly $13 trillion economy (an infusion of less than 1%).
One, as long as they're doing this, why do it through banks? Why not send out vans and just pass out money to the homeless? Seriously. They'd spend money if they had it. Instead of a trickle down, we could have a surge up.
Two, is a stimulus really what's needed? Unemployment is higher but, at 5%, it is not that high. Meanwhile, a big part of the bump we're feeling is from home prices settling a bit. I'm not sure that's so bad. Here in San Diego, median home prices topped $500,000 for a while. If they kept rising at 5% to 15% a year, about .001% of households could afford homes, eventually. I'm not sure who benefits from that. If dropping home prices hurts the economy some, I don't know how that's to be avoided. Stimulating the economy so that home prices stay out of reach might help speculators, but it's not obvious how it helps normal people who just want a place to raise kids.
Three, our problem may be less a matter of stagnating consumption than over-stimulation. We already spend plenty. Many countries have savings rates of 20 to 30% (China's is close to 50%) but our savings rate is not far from zero. (Last year, briefly, our savings rate was negative.) It may be that stimulating the economy now is like offering an exhausted, crying baby a rattle.
Instead of more macroeconomic stimulus, how about a better safety net for this age of globalization? Why not offer longer periods of unemployment coverage, more aggressively fund training, and adopt policies that make housing affordable rather than expensive? A stimulus package seems like such an expensive and vague way to address real and specific problems.
And besides, it's not as though no one in Washington has already thought to cut taxes and increase spending in the last 7 years. If that is really what we needed, it's hard to explain how we got here.