Fighting the slowdown in the US

Once again the FED has cut the interest rate by 50 basis points. This was not unexpected after the gloomy figure about GDP growth in 2007. So the FED is just doing what every macroeconomist would suggest to do when a slowdown is hitting the economy. But, the US government is preparing another plan to stimulate the economy, which contemplates the US of fiscal policy.
The so-called fiscal stimulus has not been well acclaimed by many respected economists, as PL has shown in the last post. The reason is that Fiscal Policy is not considered today the best instrument for short-term stabilization. There are two problems associated with fiscal policy as a macroeconomic tool: first, it is hard to conceive (because of the many distortions that it can provoke); second, it takes time to assess its impact.
Coming to the US package, among the main arguments the critics have advanced, I endorse the words of our Master of Thought Paul Krugman, who claims the package is ill conceived because it is targeted to the people who needed it less. In short, these are the people who probably do not suffer for a temporary lack of liquidity (not the people highly indebted, not the poorest).
When and if the policy will start to appear as ineffective, the US government will be probably forced to propose another plan, but it will take some time to realize this, which may be probably be too much, given the magnitude of the problems the US economy is facing. The risks are two. One is that, when expectations start to come at play, a slowdown may turn into a recession; if no sign of recovery appears, the FED will have to keep on sustaining the economy by a further tax cut, but here comes the second problem: monetary policy ceases to be effective when the interest rate reaches very low rate. Mr Bernanke will never try to reach the neighborhood of zero for any reason, but his room for manouvre is shrinking after today's cut. So if the fiscal package is not effective, the problems for Mr. Bernanke will become bigger. There is of course another path to follow. What the Us government can and should do, is probably listen to Mr Summers' suggestion to strengthen the financial sector. After the recent mess, this is something that needs to be done. The road to reform is a painful one, but it probably avoids the problem associated with the expectations channels: it signals the intention to fight a recession at every cost, plus providing long term beneficial effects.