Fiscal Stimulus

Some kind of fiscal stimulus plan looks likely. Normally I'd say the economy should be let to run its course. But this is also an opportunity to fix some things that don't get fixed unless there is a crisis. That's right, it is a chance to keep taxes down at least for a while. Here would be my recipe.

1) Immediate $500 gtax credit (not grant) to anyone who filed a tax return last year or who paid any form of federal taxes. $1000 for couples filing jointly. To offset taxes due in April and/or increase rebate.
2) Abolish the Alternative Minimum Tax. Right now. No questions asked.
3) Extend any past tax cuts (Income, Dividends, and Capital Gains) for as long as possible. At least until 2009.
4) Credits to financial services companies for re-writing subprime loans to offer alternative payment plans for the borrowers (together with a Fed lowering of interest rates, this should be straightforward).
5) Extend item 4 to credit card issuers, to help people work off high balances and avoid further defaults there.

This is only at the federal level, but high tax states should do something as well, tailored to the particular economic condition in those states.

In addition to fiscal benefits, the psychological benefits created by the perception that the government is taking prudent action could itself forestall a recession.