First, Robert Reich says consumers are simply out of gas:
After three decades of flat wages during which almost all the gains of growth have gone to the very top, the middle class no longer has the buying power to keep the economy going. It can’t send more spouses into paid work, can’t work more hours, can’t borrow any more. All the coping mechanisms are exhausted [Robert Reich, "Why No Amount of Fiscal or Monetary Stimulus Will Be Enough, Given How Small A Share of Total Income the Middle Now Receives," Robert Reich's blog, 2010.09.21].
Then Jeffrey Rubin notes that we're out of cheap gas:
What's being overlooked is that last cycle's rate of growth was fueled for the most part with cheap oil--oil was below $30 a barrel for the first half of the period. Even today's oil prices weren't encountered until the last year of growth. That's not incidental to the performance of the world's largest oil-consuming economy, which relies on imports for over half of its 19-million-barrel-a-day requirement.
Feed the US economy cheap oil, and you'll see robust growth rates and a drop in the jobless rate to four-decade lows--no matter who's in the White House. But throw in $147-per-barrel oil, and the US economy stops dead in its tracks [Jeffrey Rubin, "Obama's Fiscal Stimulus No Substitute for Cheap Oil," Huffington Post, 2010.09.21].
Now before you think TransCanada's Keystone pipelines will solve that problem by swelling our supply with Alberta tar sands oil, heed Rubin's reminder that tar sands oil doesn't flow for much less than $100 a barrel.
By this thinking, fiscal stimulus doesn't do much but help us tread water instead of drowning in Depression. Under the concentration of wealth and high oil prices, the economy just can't rebound to the levels of growth necessary to generate the future revenues that would pay down the deficit spending we're using in the current stimulus.
But the answer is not simply to abandon the stimulus and hope everything works itself out. The "work itself out" crowd brought us to a shrinking middle class and continued dependence on oil. To get out of the economic doldrums and beat the deficit, we need to (says Reich) reorganize the economy to expand the middle class again and (says Rubin) kick our addiction to oil in favor of cheaper, cleaner energy sources.