Most of the economic policies currently debated in America's mainstream discussions have one thing in common - they are relatively small tweaks to our existing economic system that seek to address a specific problem in a vacuum, without viewing it in the larger context of our highly inter-dependent economy. Every mainstream politician, academic and pundit seems to think that the foundation of our economic structures are sound, and we merely face marginal flaws which should be tweaked away. In fact, our entire industry of economic and financial analysis (epitomized by CNBC) is based on this principle that "everything is just slightly off, but don't worry we can fix it with a few small changes". The following paragraphs will explore a few examples of this "tweak mentality", and discuss why these unimaginative ideas should be scrapped for a complete restructuring of our modern economic system.
Bush Tax Cuts
A prime example of this ingrained mentality is the current economic debate over the Bush tax cuts and whether they should be allowed to expire. Many on the left side of our faux political divide feel that the cuts did very little to aid the productive economy, enabled reckless financial speculation, and cost the American people billions in potential tax revenue. The CBO projects that our country will reduce its budget deficit by about $500 billion over 10 years if the tax cuts are allowed to expire. . On the other hand, many conservatives analysts believe that expiration of the tax cuts will stifle much-needed economic activity during our deep recession and may not help our deficits as much as we are being led to believe by Obama's administration, since less taxable money will be spent or invested by the rich people whose tax rates will increase. The mainstream financial press, and especially CNBC, frequently frame the issue as one involving a "correct" answer that will promote renewed economic growth.
Everyone seems to miss the fact that we are in an economic predicament, and there will diminishing returns (possibly negative) to any tweaks of existing complex structures. Obama's current plan of allowing the tax cuts to expire for individuals making more than $200,000 (families making over $250,000) will certainly drain some money out of the private sector that could otherwise be spent or invested. When these wealthy people expect their future tax rates to increase due to an expiration of Bush tax cuts, taxes imposed by Health Care "Reform", and taxes/fees levied by local and state governments, they will begin hoarding even more cash "under their mattresses". There is also evidence that suggests the tax revenues of a central government can never rise above 20% of GDP. The rich people affected by higher effective tax rates can find clever ways in which to blunt their impact, such as reducing their taxable income to be right under the $200,000 cutoff, moving their incomes offshore to countries with lower effective rates, or utilizing "tax shelters" and various loopholes in the tax code. 
Leaving the tax cuts in place will still reduce federal tax revenues at a time when we are running record deficits and will continue to do so, regardless of what party is in power. Our creditors will not continue to charge us sub-4% interest on long-term treasury bonds when supply continues to be at record highs and tax revenues decrease due to continued tax cuts and a deflationary economy. It is also not entirely accurate to suggest that money saved by rich people from the tax cuts would provide a significant boost to the economy and GDP. The CBO estimates that every dollar saved by these people (or spent by the government) will only produce a 10-40 cent increase in GDP, which is obviously very little return on the taxpayers' investment.  There is also the issue of what kind of economic boost we will get by keeping the tax cuts in place. Most analysts fail to mention that increased consumption and investment in financial markets is not the equivalent of healthy, sustainable economic growth and will merely extend our lifeline by a year or two at most, while potentially making worse the underlying structural problems we face (namely too much debt).
Our politicians and pundits should instead be focused on more dramatic transformations to the existing structures that have failed us and led to our economic predicament in the first place. The ever-insightful economist Michael Hudson has suggested that radical reform of modern tax systems is a necessary step in creating more stable, yet competitive economies. Although he has focused on countries in Eastern Europe, the reform measures could be just as successful in the U.S. He advocates greatly reducing taxes on labor, such as income taxes, and shifting this taxation to "economic rents" created by rising land values. Reducing taxes on labor would reduce the cost of employment without squeezing workers' take-home pay, while taxing land would disincentivize debt-fueled speculation by leaving less value to be capitalized into loans by banks. It would also make residential and commercial real estate more affordable because the taxed land value would not be included in mortgages issued by banks. . I may not be as optimistic as Hudson, who believes these types of reforms can largely "solve" our problems of private and public over-indebtedness without significant austerity and reduced standards of living, but his "radical" suggestions will be much more effective than the marginal tweaks proposed by Democrats and Republicans.
Financial "reform" was the administration's attempt to tweak a dying system back into health, and convince the American public that this goal had in fact been accomplished with the bill's passing. Our government looked at the sub-prime housing crisis after the fact and analyzed its various causes in a vacuum, assuming all else in the economy would remain equal. If the banks were negligent in making loans to sub-prime borrowers, then we just need to have tighter lending standards. If their executives pursued short-term gains at the expense of long-term value for shareholders, then we just need to regulate executive compensation and tie it to share value. If the banks were under-capitalized for the amount of risk they were taking, then we should simply raise their capital reserve requirements and be done with it. There is not anything inherently wrong with the policies themselves, and some of them may actually be beneficial in the long-run, but it is the theoretical framework they use to make these decisions that is flawed.
They view the subprime crisis as an isolated incident with superficial causes, instead of something that was a small part of a bigger process at work. The credit bubble that burst in 2008 had actually formed over at least thirty years, and it reflected an exponential increase in economic complexity. Now the administration would like to "solve" that problem by adding on even more complexity, when there are obviously diminishing returns to their regulations and unintended consequences produced by them as well. Tighter lending standards may just provide cracks for larger creditors to slip through by "engineering" new financial products, while also pricing out those productive enterprises which need some up front capital to get started (i.e. a company that produces and/or installs solar panels). Higher capital reserve requirements, such as those suggested in Basel III (7% by 2019), will do little to disincentivize risky investments when we need to the most and could also crowd out investment in productive businesses or in the public sector which desperately need to keep their borrowing rates low. . Perhaps what we really need is a complete dismantling of our debt-based money system, in which nearly all of our money in circulation is created as debt. This system where all money is loaned into existence effectively makes it impossible for the money supply to keep up with the compounding interest owed by borrowers. 
Of course, the most significant economic tweak by our current administration has been the trillions injected into the economy through fiscal stimulus (bailouts, stimulus, automatic stabilizers, etc.) and monetary easing (quantitative easing, zero interest rate policy). The logic used by the administration and academics (such as Paul Krugman) to justify these actions is that they have worked in the past to lift our economy out of recession, so they should certainly work again. Well it is precisely because Keynesian policies have "worked" in the past that we have reached current levels of private and public debt saturation, and now the economnic dynamics are much different than they were in the past. $700 billion in "toxic asset relief" ended up sitting in the coffers of the bailed out banks or creating mini-bubbles in stocks, bonds and commodities, which will only make the next crash in asset prices worse. . $800 billion in "American recovery reinvestment" was severely diluted in bureacratic waste or directed towards unproductive activities. . $2T in Fed purchases of mortgage-backed securities and treasuries once again found its way into banks' reserve accounts and helped blow a few more speculative mini-bubbles. . President Obama's new stimulus proposal to make 100% of new capital investments tax-deductible will simply bring forward tax deductions that would have been made in the future anyway, or could actually incentivize companies to defer investments if they expect their taxes to go up in the future. . The low interest rates are doing nothing except punishing savers by paying next to nothing on cash deposits, and through the unintended consequence of depleting the funds of private defined pension plans, which just suffered a $108 billion loss in one month. 
Instead of spending a few billion here and there to restart the credit bubble which destroyed our economy in the first place, our leaders should focus on major transformations in our national priorities. We should stop funnelling money to large banks and other politically connected groups, and deal with the reality of our predicament. Military spending can be drastically reduced and redirected towards alternative energy development and infrastrucutre, which would allow us to create jobs and reduce our dependence on fossil fuels. Our tax policies can be significantly restrucutured to provide relief to the working class while obtaining revenues from those who extract economic rents through appreciating land values and managing other people's money. The debt-based monetary box we are currently trapped in can be dismantled and the power to issue money can be returned to the people through their representatives in Congress. Whatever policies are ultimately adopted, it should be painfully clear at this point that our current systems are inherently unstainable and will lead to great suffering unless we have the courage to sacrifice familiar tweaks for major structural changes.