Remember: Government Has No Money to Give, II
The money has to come from somewhere. If you raise taxes to fund the plan, the people who are taxed are poorer and they'll spend less. If you borrow money to fund the plan, the people who buy the government bonds have less money to spend and that offsets the stimulus. It's like taking a bucket of water from the deep end of a pool and dumping it into the shallow end. Funny thing—the water in the shallow end doesn't get any deeper.
And even the people who get the money often save more of it than they spend.
That's why stimulus schemes based on giving people money have a poor track record of energizing the economy. Usually, the only thing that gets stimulated is a politician's approval rating.
~From George Mason economist and Cafe Hayek blogger Russ Roberts on NPR, transcript available here
Bottom Line: Despite what the media, general public and politicians seem to believe, there simply is no such thing as government money. For the government to send out tax rebates to one group, they have to: a) raise taxes on other groups to get the money, or b) borrow money from other groups to get the money, meaning there cannot be any net positive stimulus, as Professor Roberts suggests above. It's merely a coerced government transfer of funds from Group A to Group B, making one group better off at the expense of the other group.
The only comment I would add is that the transfer of water from the deep end of the pool to the shallow end in Professor Roberts' example is done with government's leaky and porous bucket (pictured above), so that the pool actually loses water overall and becomes smaller at both ends!