Beware politicians handing out free money.

Pundits may have cheered President Bush and House Speaker Pelosi last month for coming to a quick compromise on an economic stimulus package - which really should be called $150 billion in deficit spending - the centerpiece of which is a plan to send checks to millions of Americans.

Unfortunately, as is too often the case in Washington, the Bush-Pelosi plan dispenses with what works in favor of what sounds good.

If we're going to borrow $150 billion from China specifically to jump-start our economy, we ought to make sure we use the money as efficiently as possible. And, according to the scrupulously nonpartisan Congressional Budget Office, the quickest and most cost-effective way the government can get money out into the economy is to temporarily increase food stamps and unemployment benefits available to out-of-work Americans.

That makes sense, since the people who get food stamps and unemployment checks have almost no choice but to spend the money. And taxpayers get a real bang for their buck, too: every $1 in unemployment benefits adds $2.20 to the economy, according to the Labor Department. Yet the Bush-Pelosi economic stimulus package doesn't increase food stamps or unemployment benefits at all. Instead it devotes most of the $150 billion to rebate checks - always popular with congressmen, who hope you'll remember in November the check you got in May.

Moreover, in a worsening economy, Americans may not use their rebate checks in ways that do much for the broader economy.

With millions of households deep in debt, a lot of people could decide to use the money to pay bills. Others may put the cash away in a bank account. (Then again, in recent years American consumers have not been known for saving or bill-paying.)

Plus, if people do spend their rebate checks, they're likely to spend a lot of the money buying Chinese imports - leading some analysts to speculate that the Bush-Pelosi plan could help China's economy more than ours.

But this is all par for the course in an American economy that's dangerously out of whack.

For the majority of Americans, the key problem is that economic growth nationally no longer leads to an increase in prosperity personally. As Robert Reich makes clear in his terrific new book "Supercapitalism," most Americans still aren't getting ahead in this globalized, high-tech era.

Economists are still debating what factors are to blame for this - probably some mix of downward pressure on wages in a global labor market, the decline of unions, tax policy changes, and a lack of opportunities for Americans without a college degree. But the trend is real.

As Reich notes, Americans found three ways to maintain middle class lifestyles despite declining wages. First, women went to work, giving households a second income; next, both spouses started working more; and finally, Americans borrowed an astronomical amount, not to invest but to spend. But now, families are hitting a wall. Merrill Lynch economist David Rosenberg estimates that there is $6.5 trillion in excess debt nationwide.

People will have to pay that debt back - reducing the consumer spending that makes up 70 percent of the economy - or default on it, an unhappy outcome for everyone involved.

Needless to say, with the national savings rate around 1 percent, the average household doesn't have savings to fall back on. One credit counselor told The New York Times: "People have come to view credit as savings." No quote better sums it up. All people have under the mattress is a Capital One card. Meanwhile, Fed chairman Ben Bernanke is reacting to the credit crisis by slashing interest rates.

That could help with one problem by making banks lend more freely. But it will make another problem worse if it leads households to take on even more debt.

For its part, the federal government owes $9.2 trillion - or $30,000 for each citizen - with a wave of Boomer retirements just around the bend. When you get your rebate check, then, remember that you're borrowing the money from your grandchildren.

Though we're all understandably loathe to deal with it, this national addiction to debt is unsustainable - and the longer we put it off, the harder it's going to be to rebalance our economy.

TED NESI is a Sun Chronicle staff writer. His column appears on Fridays. He can be reached at tnesi@thesunchronicle.com.