Why doesn't the average American much less the average politician understand the crisis the economy is facing?

What makes you so certain that you have a sufficient understanding of the recession that you can ask such a question with such "details"?

People, Americans in general, look at the short term anyways, so it's actually natural for politicians to look at the short term anyways. This is because:
1) the general American public just have a nonchalant attitude anyways towards almost everything that doesn't directly play directly into their lives. I mean, barely half of the people can name the two senators from their state, and even less about prime ministers in key foreign countries. So as a result, most people don't even know what a deep hole we're in right now.

2) Taxes. All Americans hate taxes, they complain about that in everything, but yet that's actually the primary source of revenue for the government. But since most Americans will scream their heads off when the gov't propose raising taxes, there's really no way for the government to increase revenue except by either borrowing from foreign countries or by cutting down programs (which then, Americans will complain anyways), leaving with basically borrowing money from foreign countries.

3) The Two party system. Even if the general public allow the increase in taxes, our two party system is always too busy bickering on how our money should be spent, so as a result, the budget is never finished on time resulting in inefficiency use and waste of money. And because of that, we're constantly digging deeper and deeper in debt, with the only solution is continuing borrowing money (in the form of bonds) and let our future generation of children to worrying about the problem; the people just think there would be magical solution somewhere in the future.

So basically, we're borrowing money right now to pay for the money we borrowed before, and then borrowing even MORE money to pay for that borrowed money. It's just a negative feedback, there's really no way we can really stop it. So when foreign nations finally stop borrowing money to us, we can only either raise taxes like heck, cut down on a whole bunch of programs, and cut down the size of our military. These seem like the only viable solutions unless a better budgeting of our money happens.

I think it's the nature of politics to be short-sighted. Sure, they know that if they borrow at an insane rate, it might bankrupt the country. But in the short run, there's a chance that it will stimulate the economy and put it back on track. The consequences of additional debt probably won't be felt until after they finish their current terms.