http://krugman.blogs.nytimes.com/2011/07/16/the-political-economy-of-the-lesser-depression/

One answer is that macroeconomics is hard; the idea that if families are tightening their belts, the government should do the same, is as deeply intuitive as it is deeply wrong.
But the susceptibility of politicians — including, alas, the president — and pundits to these wrong ideas demands a deeper explanation.
Mike Konczal ratchets up my rentier argument, arguing that what we’re seeing is

a wide refocusing of the mechanisms of our society towards the crucial obsession of oligarchs: wealth and income defense.

That has to be right. It doesn’t necessarily take the form of pure cynicism; it’s more a matter of the wealthy gravitating toward views of economic policy that make immediate sense in terms of their own interests, and politicians believing that only these views count as Serious because they’re the views of wealthy people.
But the upshot is terrible: more and more, this really does look like the Lesser Depression, a prolonged era of disastrous economic performance. And it’s entirely gratuitous.

http://krugman.blogs.nytimes.com/2011/07/14/obama-moderate-republican/



What Obama has offered — and Republicans have refused to accept — is a deal in which less than 20 percent of the deficit reduction comes from new revenues. This puts him slightly to the right of the average Republican voter.

The Democrats still offer the better deal.