perfidy

Johno, I agree that the sending rebate checks is fairly ridiculous. But probably not for the same reason. While a rebate check sent to every tax payer might provide a transitory boost to the economy, it is at best a short term solution. The way to effect the economy with tax cuts is to, well, cut taxes. When people know that their taxes are lower, then they will change their behavior in a way that could effect the economy. This applies to regular income taxes, which might affect consumer confidence, consumer spending, housing starts and the like. Lowering, permanently, dividend taxes and capital gains taxes would increase investment and capital development. It has been shown that lowering taxes increases revenue - because the larger economy that is spurred by lower taxes yields more money in absolute terms, even though percentage of the government's take of the total economy is smaller. These rebates will not have this effect, because people - individuals and businesses - have no confidence that taxes will remain low. The economic picture is indeed muddled. Lowering tax rates would be a solid thing that people could count on.

While even full production from the Iraqi oil fields would remain a relatively small part of the total oil production (even the Saudi's immense reserves are only a quarter of total proven reserves) the effect of that production would be to drive down oil prices. And oil prices are one of the key factors in the world economy, because in some way or other, almost every business and industry is affected by oil prices. Shipping, energy, heating, plastics - the costs of all of these are all directly dependent on oil. Every other industry uses these services. When oil prices went up by 50%, it had the effect of a tax increase, because it increased the cost of doing business, or the cost of living. When they go down, it will act like a tax cut. And it won't effect the government's budget. 

As the effects of this percolate through the economy, eventually the job market will catch up with the growing economy. Jobless rates are always a trailing indicator. If the economy is already recovering, great. The lowered oil prices will be a shot in the arm, revving up the recovery.