I think we are missing the boat here. We are arguing about simple tax policy. But since there seems to be problems with both fiscal and monetary stimulus it is clear that something else is needed. (after all, the government HAS to Do something right?)
It is clear to me that we have a lag in aggregate demand because everyone already has what they need. I therefore propose that the government institute a program whereby they go to citizen’s homes at random and destroy their property. If random consumer goods are destroyed then it only stands to reason that this will be a huge boost to demand.
Now some might think that this will fall afoul of the fifth amendment guarantees, but that is a takings clause, and this is not a taking. I feel sure that the legal minds that produced the Obama health bill can come up with the proper justifications.