As if we are conducting a lab experiment, we suddenly have the sequels to the two major government programs to deal with the financial crisis and mitigate the real economic fallout. We still, however, don't know the devil in the details, but, while we await more information, let me make a couple of points about general principles.
The first thing is that we should keep reminding ourselves of the difference between government "investments" as TARP-I featured and TARP-II will likely feature to some lesser extent, and traditional government fiscal policy. Whether using government funds to purchase illiquid (non-trading) securities, as TARP-I originally intended, or injecting "capital" by buying preferred stock in stressed institutions, as was implemented, there is a good chance that the Treasury will be able over time to recoup the cost of its investments. There will likely be some losses mixed in, but the odds on a net overall gain are good.
The stimulus packages, on the other hand, feature, not investments, but traditional government spending. Whether or not they are successful in stimulating the economy and mitigating declines in employment, the funds spent are lost to the Treasury (and only partially made up through higher tax revenues than might occur otherwise). Unfortunately, I know of no magic spending programs that are likely to be especially effective in achieving its goals and would be temporary and easily reversible as the need passes.
Indeed, it looks increasingly like the stimulus program will consist of a grab bag of traditional liberal spending programs that were rejected in calmer past circumstances. No matter what the composition of spending, advocates will be able to point to some benefits. The question is, however, whether the benefits would substantially exceed the benefits of not raising the pending budget deficit even further and adding even more to the outstanding government debt.
In addition to the important difference between government investment (hopefully temporary) and government spending of the traditional kind, is the difference in likely impact. TARP-II is designed to prevent a systemic collapse in the financial system that would be catastrophic for the economy. STIMULUS-II is more traditional government spending whose benefits may or may not exceed the long term cost. If Congress chooses wrong on the stimulus package, it will make some difference, but not a lot. The two programs are apples and oranges.