Obama's New Spending Plan

Obama has announced that he will quickly pass a huge stimulus package upon entering office in January. Over the last week and a half there has been wide speculation to the actual figure of the package. I have seen numbers ranging from $400 billion all the way to $1 trillion. These numbers are all absurd. We have entered a point in politics where things are so bad that the citizens of the nation don't care how much the government spends so long as there is, at least a perceived, chance of things getting better.
Obama's plan is essentially JM Keynes' wet dream. He wants to invest this money into infrastructure, calling for a public works project to rival when Eisenhower made the national defense network (the interstate highways). This seems like a sound idea to me. It has become clear that tax breaks and rebates will likely be saved since so many people are in financial peril or are worried about the long term security of their jobs. America cannot rely on foreign demand for their products to stimulate the economy since demand is down everywhere. The only other option would be government spending. Since corporate output, at the national level GDP, is a product of labour and capital there is no better way, in theory, to spend money than on infrastructure. It boosts the national capital, be that rail or road links, improved harbours, airports or upgrading utility connections. These all lead to a higher capital base which increases the potential GDP in the future.
So how do you spend a trillion dollars quickly, efficiently and fairly? You can't really. State and city governments have been lining up for their chance to get their pet projects financed. The government could transfer money to the state governments that, under the zero deficit rule, have been struggling and cutting back on everything to help fill the gap and keep services up to the normal level; now that the economy is so bleak those services are even more important. Although most people would like the money spread fairly there is a lot of merit to keeping the money in the cities. The cities drive the American economy and as such improving city infrastructure will lead to a greater secondary boost to the economy from the private sector. If Obama tries to spend the money too efficiently and scrutinize all of the planned projects too much he may waste precious time. If the government saves 10% of the costs of the stimulus, at the price of an extra quarter's worth of contraction the benefits are highly outweighed by the costs. Likewise if he doesn't look closely enough at the proposals, the money may make its way to less important projects (like a proposed dog park from one big city mayor) at the cost of better project.
There is still some good that could be done by a large tax rebate. If everyone received a $500 tax rebate, approximately $150 would be spent and $350 saved (According to figures in last weeks 'The Economist' tax rebates in America have a 70% saving rate). This will do little in comparison to government spending to boost the economy but maybe help the banks keep liquid with the added deposits. That is, if people still trust the banks?