I think Digby and others have properly identified the biggest problem with the deal Obama and the Repukes worked out to extend UI and prevent the Bush tax increases. The rest of it is awful as well, but I think progressives would accept the package - with plenty of grumbling, to be sure - if it didn't pose a danger to Social Security. But there is no reason to think that the economy will be doing significantly better in 13 months, or that Democratic politicians will be any more competent at messaging and negotiating. So the 2pp payroll tax cut will be extended in January 2012. And again in 2013. And again, until people realize that it's permanent, and SS benefits will have to be cut, or means-tested. Either way, Republicans end up making a huge step towards their goal of ending Social Security.
On top of that prize, Republicans also got a good deal on the estate tax, plus an extension of the separate and much lower income tax rate on dividends and capital gains. In return, Obama got money to extend unemployment insurance benefit eligibility to 99 weeks, and a slew of small-bore tax cuts of dubious value. Taken together, the stimulus value is lousy, though it's still better than nothing at all. But, to me, the long-term danger to Social Security doesn't seem worth the gains. Yes, that's easy for me to say, because I'm not on UI. However, Social Security has been the cornerstone of the United States rather weak safety net for decades. Undermining it is a line that should not be crossed. That's why I think Democrats should reject this deal despite the repercussions and harm that will result.
Update 2010/12/18: This is the clearest statement of the deal's problems that I've seen.