Hannah, even if every redneck DOES go out and buy an iPod with the money, that still stimulates the economy.
For every imported electronic good, only about 10% goes back to the country where it was manufactured.
The RRP of a product generally gets sliced up with:
~30-60% going to the store on MOST electronic products (there are a lot of exceptions to this rule that lie on either side, but it works for most);
~2-15% going to cover stock losses & expenses (theft, damage, insurance, etc);
~5% to pay for transport;
(~10-20% for license to sell product in some instances);
~10-20% to purchase from the manufacturer.
So you're still looking at about 50-70% of the sale price staying within the economy, and being paid out in wages, or further needs of the store (i.e. handymen to fix shit, couriers, etc.) and trickling through as diminishing returns.
As for handing out money to people, aside from inflation, there are some things that Governments will always handle better than individuals, and sometimes even better than private enterprise (yeah yeah, burn the fiscal heathen).
You think anyone would build roads or sewage works other than the Government? Education's another. Sure, Government education isn't as good as private (in the US at any rate), but it's better than the big fat none that a lot of people would receive if it was all run privately, etc.
Sure, there's been a fair bit thrown at personal pet projects of senators and congressmen, but even that shit will trickle through the economy. It's not the area where the money is first spent that's really meant to be rejuvenating the economy.
I remember someone complaining about the money being tossed at Hollywood for more movies... Do you have any idea of the money most movies bring back into Hollywood from international box office sales? There are times when the secondary markets exceed the US box office sales. Hollywood is one of the US' biggest exports!
I can't remember who said it, but they hit the nail on the head. The stimulus package is basically throwing a whole heap of shit at the wall and seeing what sticks, and what will make the stuff around it stick.