Two things here, first, they were not lump sum. My paycheck increased by $13 a week and that lasted several months.
Second, while that money was not withheld in payroll taxes, it is subject to the income tax. Minimum tax bracket is 15%, making the $400, $360 after income tax and that's just federal, still have local and state income tax to pay on that $400.
$13 a week is not a lot of money.
$13 a week is not much of a stimulus.
You agree it would stimulate the economy, growing GDP, but you claim we cannot afford it... The only way to increase tax revenues is to grow the GDP.
If you look at THIS REPORT from the CBO, on page 4 it shows the historical tax revenue as a % of GDP. Regardless of tax rates between 1968 and 2007, the average revenue from taxes is about 18% of GDP.
The lesson should be clear, the only way to increase revenue is to grow the GDP. If you agree that massive tax cuts would "stimulate the economy in a big way", then you would have to recognize that 18% of a larger GDP is going to be far more revenue than 18% of a smaller GDP.
As you can see above, real, across the board tax cuts pay for themselves by growing GDP. The problem is, as you point out, spending. Yes, we should drastically slash spending. Details for how to accomplish that would probably be best suited for conversation in a separate thread.
We haven't staved off a depression, we're making things worse. Let's say you make $50,000 a year but you spend $60,000 a year. You can't maintain that level of spending so you get a credit card for the deficit. You have to pay interest on that debt but you're still making $50,000/yr.
So the second year you spend $61,000, and the $11,000 deficit goes onto the credit card, causing you to pay even more in interest. Third year, you're spending $65,000, fourth year $70,000, fifth year $75,000, sixth year $88,000, seventh year you've reached spending levels that double your income.
All that spending is done to maintain your current standard of living but it is not sustainable. At some point, what you owe in interest will consume all of your revenue and eliminate the possibility of you every paying down the principle. At some point the credit card company will cut you off. At some point the whole house of cards collapses.
People think the Bailouts and Stimulus packages have worked because they have allowed us to maintain our living standard but as I said in an earlier post, this is just an illusion that will make life exponentially more miserable the longer it continues. At some point there will be no more cards in the deck to build our house and the whole thing will collapse under the weight of reality.
It was sold to us as necessary to buy up all the toxic assets and get them out of the system. If we would have done that, there would have been nothing to pay back and those assets wouldn't still be floating around the economy.
Rather than purchasing the toxic assets, we "loaned" the money to mega banks (too big to fail) and instructed them to use the funds to go out and buy their weaker competitors (who didn't get bailout money).
This consolidation of banks placed an elite few in possession of an overwhelming majority of capital and customers and made governments control of the banking industry much easier. At the same time, government offered banks low interest loans of freshly printed money, which they borrowed and used as funds to repay the TARP money.
TARP was a shell game that didn't fix the problem of toxic assets. People like yourself only seem to care that it was paid back, you don't seem to be bothered at all by the fact that we were lied to about it's real purpose in order to get it passed.
