We should have done more of the things that were traditionally done during and after recessions:

1) Extending unemployment benefits until the unemployment rate was close to normal.
2) At least maintaining (and not cutting) food stamp benefits.
3) Increased (not cutting) aid to states and cities so that they didn't have to lay off huge numbers of teachers and other public employees.
4) Substantial increases in infrastructure spending while interest rates are low.
5) Substantial increases in financial aid for education and training to keep people off the street and lay a foundation for smarter growth in the future.

Etc.

Basically, you increase demand by giving money to people who will spend it. Yes, the banks needed to be rescued, but that was not sufficient. As Atrios says almost every day - http://www.eschatonb...-happen-when.html

Too many famous economists decided to forget standard economics and buy into the stories from the no-nothings on the right who screamed about inflation. It was a willful destruction of the knowledge painfully gained after the Great Depression and the various crises after.

We know how to get out of this mess. The instructions are in the classic introductory economics textbooks. Our politics is too broken at the moment to apply them. (Though we haven't forgotten quite as many lessons as the Europeans...)

Things are different when the economy blows up after a bubble. Austerity makes things worse. You have to spend, and spend a lot, to get out of it. When the recovery is well underway, then you slowly reduce the stimulus. And yes it does work and yes it doesn't lead to Zimbabwe!!!11 - see the USA after ~ 1940 - 1972.

Will Congress do anything? Hard to say. There are too many Teabaggers still in power, but some things will probably be done on the margins. As long as Europe doesn't collapse and as long as China doesn't fall into a recession (which I don't see how they avoid forever), we'll probably be firing on all cylinders by 2015 or so. But it shouldn't have taken 8+ years to crawl out of the hole the Republicans created...

My $0.02.

Cheers,
Scott.