Pain Caucus / Austerians
(a policy prescription looking for a rationale)

Krugman blogs on why the administration didn't do a second stimulus:

My understanding is that they bought into the big scare of the time, which was that there was a "carry trade bubble" in the bond market, and terrible things would happen when it burst.

No, this never made sense. Anyone who looked at recent Japanese history should have realized that with a depressed economy, low rates could and did last a very long time.

And some of the scenarios being proposed were just plain bizarre: the bond bubble will burst, and this will plunge us into recession, and the Fed will have to buy up government debt, and this will mean inflation too. Really.

And then the whole story shifted: suddenly it wasn’t the carry trade, it was sovereign debt risks, we’re all Greece.

And now there’s a new one: you see, low interest rates will cause deflation. Really (near the end).

And though the story shifts, the moral is always the same: the little people have to suffer.

Maybe Krugman is right on the chronology, but I believe things might have been going fine until the unforeseen European Sovereign debt crisis in the spring. We can't know for sure.