What if we gave the bailout to the people?

So first of all this website looks amazing Paul! Great Job!

Second, I was reading an article recently that proposed an interesting idea that the $700 billion bailout could be given to the American people instead of to the failed credit institutions. The author assumed that the population was 300 million and that within that 200 million people were between the ages of 18 to 65. The proposal was that if the government took the $700 billion dollars and distributed it as a dividend to the 200 million people, being taxed accordingly, would give each person roughly $175,00. The author then gave possible spending purposes of this money. A family could pay off their home mortgage and reduce the number of foreclosures thus helping the housing crisis. People could pay back their student and business loans thus increasing the strength of a weakened credit market. The author gave about ten examples in all.

There is a crucial flaw in this simple proposal. It trusts in the ability of the population to overcome its propensity to save as it does with every tax incentive issued by the government. Therefore without a solution or mechanism to ensure a larger percentage of people spending this incentive if it was implemented, the proposal would fail to increase consumer confidence or strengthen the credit markets just as Bush's latest tax incentive failed.