james galbraith published the below chart showing how much each dollar spent puts back into the economy as compiled from congressional testimony. as many have pointed out before, the things that are most stimulating tend to be things that give money to poor people. the poorer you are, the less likely you are to save the money you get and the more likely you are to spend, which puts it back in the economy. furthermore, if you're poor you tend to spend on a business whose customer base is poor and thus the business is also less likely to be able to save. the more times a dollar is spent, the more that single dollar stimulates the economy. ideally any stimulus package would try to maximize this "echo" effect.
(click to enlarge if the print is too small)
but the fact that the best spending is directed at poorer people causes a knee-jerk anti-welfare reaction among conservatives. which is why the compromise pushed through by "moderates" targeted mostly those things, even though the data suggests they are the most effective ways to spend money. it's ideology, not data, driven.
(via
steve bates)
(click to enlarge if the print is too small)
