The U.S. economic system largely depends on a mixture of greed/capitalism balanced with regulation to make sure cheaters do not overwhelm the system.
It also depends on the goverment not artificially mucking up the system with policy driven rules and regs.
The current crisis was created in the following manner:
* Clinton administration directs that more people should own homes and pressure Fannie and Freddie to back mortgages to people who previously did not qualify. Result: home ownership grew from historic average of 64% to 74% in less than 10 years. Result 2: a new class of mortgages...we know them as "sub prime"...was born.
* In 2004, the Bush administration pushed for less regulation in the financial industry. Result: conditions were set for rule bending without repercussion.
Overall result: the subprime folks who were buying ever more large homes they had no business buying, then using the run up in home prices to finance cars and things they never could afford, hit the wall and the economy took a hit. Then the cheaters are called front and center and have trouble explaining hundreds of billions of funky entires on their balance sheets called "CDOs" and "swaps". And presto! Here we are in global financial meltdown.
Bottom line: If the government spends the "stimulus package" on things that really do create jobs and incentivize spending on real things, then the federal government has the right role to play. If they do it the way the current bill outlines it, this will be a disaster of the highest proportions because we will spend nearly a trillion dollars more with no results to show for at least three more years.
Next, consider that the great "New Deal" of FDR utterly failed to end the Great Depressions after more than 8 years of trying. Only WWII managed to truly end the Depression.
So the lessons are:
1. Government is ultimately responsible for this mess: They changed the rules on home ownership and created sub prime, they changed the rules on cheating and allowed a lot of it to go unchecked, which created the huge balance sheet debacles we now are trying to undo and pay for.
2. Past attempts to "spend our way out of the mess" a la the New Deal failed, including the New Deal itself.
The government generally does not create jobs, though its policies can encourage or hamper jobs.
When government jobs are created, those are like adding middle managers to your business - they are an overhead that must be sustained by others who do work that produces true value.
Being as generous as possible, one could claim that government-funded projects create jobs. To the extent that the money paid into that work produces net value, even considering the inefficiencies and losses as money gets filtered through the government, those jobs are useful... to the extent that value is not created or the money is used inefficiently, it can more closely resemble welfare with a work-ethic.
Burdening the economy with higher taxes, union demands and too-high minimum wages raises the costs to do business, making our labor less competitive when compared to the world market.
Historically, when the American people are freed to use their resources without an undue burden by the government, they will use their own money with far more efficiency and innovation than any government bureaucrat.
Therefore we must first stop vilifying profit and corporations, but value successful businesses for providing fuel to our economy and employment to many.
We should also note that after the Bush tax cuts, tax revenues went up, not down.
Unfortunately, we will never be able to see the job not created because taxes took away those retained earnings, or because government borrowing crowded out the private debt that would have funded expansion, or because that consumer didn't have the disposable income to spend on that product that would have needed to be produced. It all never happened because government spent money on less-efficient allocation of resources in 2009-12. So, while government spending may be "creating" some incremental jobs, it is simultaneously destroying far more jobs that are never seen because they never came into being.
Government involvement in the economy does not "create" anything; by its very nature it destroys. There is no action government takes that actually "creates" jobs, products or services that does not automatically come from the "destruction" of private capital through seizure: ie., taxation.
So this is a "false problem" of government creating jobs. Unless the government begins by getting private, VOLUNTARY investment in a business where it intends to run - for a profit, without any taxpayer subsidy, legal monopoly or other protectionism - a business in which a product or service is VOLUNTARILY consumed by others, then there is no creation.
Remember that for nearly a century before the era of "full time government interference" in the economy, we had the greatest growth in the history of mankind, and even a few booms/busts in the 19th century corrected THEMSELVES without a penny of government money.
Government "creation" of jobs is a "media cover" for what would otherwise be called inflation, deflation, or a SUBSIDY. But since we don't speak political truths any more in America, the story goes on and the American wealth heads toward achieving the most spectacular forfeiture of human achievement in all of history.
Remember, the Dark Ages were dark "on purpose."