Some people waiting for their economic stimulus checks may be in for a shock.

According to USA Today, about $2 billion in payments from 1.8 million checks are being confiscated from people who owe child support, student loans and back taxes. Taxpayers get letters from the government explaining why their bank accounts are not being stimulated and so far few have complained, according to a Treasury Department official quoted by the newspaper.

I am all for making sure that children get the financial support they deserve. People also should not be able to dodge student loan payments or tax bills. The government, though, cannot impose a one-size-fits-all solution. For instance, what if someone is laid off and is already behind in their bills? The economic stimulus is supposed to help people in need, right?

Though the economic stimulus checks have helped boost retail sales, investors should keep their expectations in check. Many of the people I know are using their stimulus checks to pay bills, not buy big-screen televisions. A good portion of my stimulus is going right back to Uncle Sam for taxes I need to pay for being self-employed. That's another rant for another time.

As Congressional Democrats and Bush Administration officials evaluate additional legislative ideas aimed at further stimulating the anemic U.S. economy, one proposal that could gain more traction in the months ahead concerns domestic infrastructure.

The consensus among economists is that the first economic stimulus package will provide only a modest boost (at best) to the U.S. economy, economist David H. Wang told BloggingStocks Tuesday. Further, if many Americans choose to save or invest their $300-$1200 tax rebate, instead of spending it or using it to pay down debt, the stimulus effect will be even less than projected.

That would leave the U.S. economy with a correcting housing sector, record-high oil prices (oil topped $113 per barrel Wednesday), a contracting job sector, an investment banking sector largely seeking to rebuild balance sheets and not lend money, and rising living costs weighing on consumer spending. In other words, Wang said, all of the classic U.S. growth engines, except exports, are likely to serve as contractionary forces through at least the first half of 2008, and most likely for considerably longer.

Want to know how much the Republicans are the creek in this presidential election? A Bloomberg News/Los Angeles Times poll found that voters believe Democrats are better able to handle the economy than President George W. Bush by a margin of 51% to 29%.

Moreover, more than two-thirds respondents said they believed the economy was doing badly, up from 56% in December. More people -- about 80% -- see a recession as likely, up from 71%. A Wall Street Journal/NBC News poll found similar results.

Is it any wonder that President Bush buried the bipartisan hatchet and worked out a fiscal stimulus package?

Wouldn't the economy have gotten more of a kick if unemployment insurance was extended?

That issue will be hotly debated when the bill gets to the Senate. Sen. Max Baucus, the chair of the Senate Tax Committee, told the Wall Street Journal that leaving it out was a "mistake." Let's hope the new spirit of bipartisanship in Washington lasts a little longer.

But I wonder whether sending tax rebates -- mine would be about $1,500 -- will really stimulate the economy? Odds are pretty good that my wife and I are going to wind up handing a lot of that money right back to Uncle Sam which isn't very stimulating if you ask me.

The stock market is not exactly cheering about the announcement of a $140 billion stimulus plan which would give people $800 tax rebate checks. In a $14 trillion economy, that 1% of GDP rebate won't do much.

I think the money would go much further if it was used to recapitalize the banks that are writing down their collateralized debt obligations (CDOs). To maintain their capital ratios -- for instance, Citigroup (NYSE: C)'s Tier 1 capital ratio target of 7.5% -- banks that write down their assets need to either raise more capital or shed more assets or both.

But the great thing about recapitalizing banks is that they could lend out that capital to people who would put down some of their own capital and borrow the rest to make a purchase. $1 of capital invested in a bank could add almost $17 to GDP. Here's a rough example: if a bank trying to maintain a 7.5% capital ratio gets $1 of capital, then it can theoretically make roughly $13.33 worth of loans. If a person wants to buy a house with a 20% down payment, then that $13.33 can be used to buy $16.66 worth of real estate.

After watching part of Fed Chair Ben Bernanke's testimony before Congress this morning, it's clear that he supports economic stimulus but does not want to exacerbate long-term deficit problems by making the stimulus permanent. I give him credit for trying to strike a healthy balance between helping the economy in the short-term without making the deficit worse. Although no politician will dare say this, as I posted here, I think the right answer is to let the recession happen without government interference.

Any presidential candidate who does not support either fiscal stimulus -- in the form of a tax rebate or a government check to citizens -- a tax cut, or both is cruising for a bruising. That's because in an election year, a politician who does not get on the bandwagon will be severely criticized by rivals for not caring about people.

There are two reasons I think economic stimulus is the wrong answer. First, it will have the negative consequence of increasing the Federal deficit which will lead to more borrowing. This will contribute to inflation and the further decline of the dollar. Consumers will be squeezed further as they suffer due to rising unemployment and stagnant wages even as prices of energy and food keep going up.

Sometimes, the market works in mysterious ways. This isn't one of those days.

The Dow Jones industrial average plunged more than 234 points to 12,543.95 after Citigroup Inc. (NYSE: C) posted a record $10 billion loss, retail sales were weaker than expected, and oil prices declined, dragging down energy stocks. The Nasdaq Composite Index, fell 58.70 to 2,419.60 and the S&P 500 index dropped 32.10 to 1,384.15.

In an interview with Bloomberg News, veteran market pundit Laszlo Birinyi said, "There seems to be no end of bad news. Trying to bottom-fish may work when you're out there angling, but I'm not sure it works with financial markets.''

Good point. Investors in volatile markets often forget that stocks, such as Citigroup, are cheap for a good reason. Trying to pick a bottom in this market is going to be difficult because there hasn't been anything quite like the subprime mortgage meltdown.