I think that Paul Krugman gave the best critique of president Obama's negotiation with the republicans:

"here’s the thing: while the bad stuff in the deal lasts for two years, the not-so-bad stuff expires at the end of 2011. This means that we’re talking about a boost to growth next year — but growth in 2012 that would actually be slower than in the absence of the deal

This has big political implications. Political scientists tell us that voting is much more strongly affected by the economy’s direction in the year or less preceding an election than by how well the nation is doing in some absolute sense."

The fundamental question was how long the universally popular unemployment benefits were going to be continued versus the tax cuts for the rich (opposed by a majority of Americans). A good strategy would have been to say that unemployment benefits should last at least as long as the tax break for the rich. This would have been seen as being both moral and reasonable. If the republican argument is that you should never raise taxes on ordinary Americans, the democrats could have argued that people who have lost their jobs recently during the economy meltdown should also be considered ordinary Americans. Reducing their benefits would have the same deleterious effects as raising taxes on the economy as a whole. If the republicans suggest that the debt level is too high, this plays directly into Obama hand. He could then demand that the tax cuts for the rich expire. Obama definitely dropped the ball on this one.