[fauigerzigerk]

But what is optimal?

I think it's pretty obvious that taking money away from the rich giving it to the poor, maybe even in the form of food stamps, has a very direct and immediate effect on GDP. So it is clearly optimal in the short run in terms of GDP and also for helping those who really need it in times like these.

But in the longer run, some of the money needs to go into investment or society will stagnate. Some of that investment can be done by governments, but central planning isn't very good at exploring new ideas. Transparent, democratic governments can be pretty efficient in doing things that are already well known and institutionalized. For instance, European health care systems are hugely more efficient than the US one.

On the other hand, the Googles and Apples of this world are difficult to imagine as creatures of some government.

[dpark]

I don't know what optimal is, but the evidence is that giving more to the wealthy doesn't help much. My family is decidedly upper-upper-middle class, and I won't pretend that cutting my taxes will stimulate the economy. Extra money is going into loan repayment or savings. If my taxes went away entirely, I'd spend more, but not enough to offset the loss of revenue to the government.

I fully agree that there must be private investments, and indeed there must be wealthy people. Whenever I hear someone say "No one needs more than X dollars", I immediately know that I'm talking to an extremely naive person. However, I do think that the pendulum has swung too far in favor of the wealthy, not just in terms of taxes.

Edit: Just to be clear, dumping money into the pockets of average Joes isn't necessarily going to do anything to stimulate the economy either. The tax rebates showed that.