Fiscal packages can be tied with blue or red ribbons. As Barack Obama’s team works on a recovery plan expected to exceed half a trillion dollars, fellow Democrats will favour spending on infrastructure and the environment. Republicans, on the other hand, equate fiscal policy with tax cuts. To please everyone, a big chunk of any stimulus package voted through Congress will consist of tax breaks for households and companies.

The received economic wisdom is that tax cuts should be timely, temporary and targeted. But the US government’s record in this regard is poor. Analysis by Christina and David Romer of 50 significant tax cuts since 1945 highlight five changes that were specifically designed to spur short-term growth. On four occasions the cuts occurred within one quarter of the economy starting to slow, and, on average, there was an implementation lag of just three months.