…if by stimulate, you mean wind up in banks that aren’t lending any money. From the Bureau of Labor Statistics:
In May 2008, the Internal Revenue Service (IRS) started mailing Economic Stimulus Payments (also called tax rebates) to an estimated 130 million income tax filers. In order to examine the impact of these payments, special questions were included in the Interview component of the Consumer Expenditure Survey from June 2008 through March 2009 to collect information on the amount of payment received, form in which it was received (electronic funds transfer or check), and how it was used (mostly for spending, saving, or paying off debt). This report contains the first analysis of these data.
So, nu, what did they find?
That’s right: two-thirds of the money either went to pay off debt or sit in bank accounts. Now, that’s not an entirely bad thing, unless banks aren’t loaning money–which is what they’re doing right now. This is why I typically don’t favor tax cuts as a way to stimulate the economy, as opposed to government spending. Money has velocity*: the more times a particular dollar is spent (i.e., the number of hands it passes through), the more jobs are created. Giving people a hunk of money, which then gets parked in a non-lending bank one way or another, isn’t the best way to put people back to work. In fact, Compulsive Contrarian Disorder victims notwithstanding, the best way to get unemployed people back to work is to hire a bunch of people to do stuff.
TEH SOCIALISMZ!!! AAAAIIIEEEE!!
*I’m just a Mad Biologist. I’ll let the economists and physicists duke it out over who is misusing this term.