Okay, I guess I should say something on current events: i.e. the financial crisis and current recession. We (economists and non-economists) know more about the current economic landscape than ever before. So there is not much insight to be gained from this post on the who-what-where aspect. I simply want to record my opinion on the when-why aspects.
We know pretty well when this started (though the NBER has it pegged, academics will likely debate the beginning for another century), but what we want to know is when it will end. My prediction is "later". In fact, this will not end until the financial sector is cleaned up. When I say cleaned up, I mean that the individuals working in financial firms, and investors in financial firms no longer expect changes to the regulatory environment. That is what should be the "end game" of the current administration when addressing the economy. Not producing a stimulus bill that they believe will dampen the downturn (as it is impossible for me to believe they expect it will cause us to bounce back to positive growth). The more legislators ignore the regulatory system of the financial sector, the longer this downturn will last. This will continue for some time though....
The financial lobby owns Washington. They want business as usual.
I would be surprised if China did not take a more active role in pressing the US administration to clean up the financial sector. Although I guess since all trading partners will enjoy spillovers from the "stimulus" there is no reason why any country would want Obama et. al to fix this without a stimulus package.
Bottom line: Michele Boldrin hit this one square on by noticing the true opportunity cost of the stimulus package.
So, a simple decision to stimululate or not, is really a decision to stimulate or regulate.
The question I am struggling with now is whether it will take the recognition of the stimulus packages failure before regulation is sought out with the enthusiasm that is warranted.