Centrism As Not Extremism
For some time - precisely when it started is a separate, but important question - liberals have necessarily defined themselves by opposition to increasingly influential, extremist factions of the Republican Party (including religiously-motivated social conservatives and, more recently, minarchist Tea Partiers). Instinctively repulsed by the emotionally-charged, sometimes violent adherents to these movements, centrism has become the dominant political ideology of the Democratic Party, with only a small minority of the populace self-identifying as liberal or very liberal.  
The most straight-forward and convincing expression of centrism I recall hearing came from Jon Stewart, who, at the time, was interviewing right-wing extremist Ann Coulter. The critical idea - Stewart's centrist manifesto - was expressed as follows:
My view is that the liberal/conservative battle doesn't matter anymore; it's sort of a dinosaur. The real battle is actually extremism versus moderates.
When I heard this in 2002 - less than a year after religious extremists flew planes into the World Trade Center and Pentagon - I thought it was exactly right. I thought it was one of the rightest things I had ever heard. That's the problem with our country - it's being overrun by right-wing extremists. And it's not just the problem with our country, it's the problem with the world - look at the terrorists responsible for 9/11. In fact, find some really ugly shit anywhere at any time and there you'll find some batshit crazy extremists.  
But almost immediately, I began to recognize problems. Really, everything worth anything started out as an extreme idea. As revolutionaries, our founding fathers were, by definition, extremists. Free speech, freedom of religion, abolition of slavery, women's suffrage - to name only a few - were all once extremist views. And it's not just ideas and movements from the past: At this point, suggesting we might want to consider legalizing marijuana is not the career killer it once was, but that's the point - the position didn't become more correct as it became more mainstream. In fact, arguing that an idea is correct because of its central location on a continuum of opinions is a logical fallacy.    
The more I acknowledged this, the more I could see the illogical core of centrism manifesting itself everywhere. For example, the centrist sees bi-partisanship as a virtue in and of itself. Consequently, centrist Democrats are constantly on the lookout for reasonable, serious Republicans that will prove up the Democrat's centrism. However, bi-partisanship - in and of itself - clearly has no relationship to validity; a person could flip a coin and be bi-partisan. And it's not just a fixation with bi-partisanship - bi-partisanship is just one form of the centrist obsession with balance.  
What really opened my eyes to the problems with centrism was the stimulus. Obama - a self-professed post-partisan centrist - asked for too little from the outset and then, centrist legislators made cuts. And these cuts were not based on any economic theory, they were made in the name of "centrism." Okay, that's crazy! Economics is a technical field and many actual economists made it clear that an inadequate stimulus could be as bad as no stimulus. It would be like a doctor prescribing antibiotics and only taking half the dosage in the name of centrism (this analogy is tired, but it really is a good fit). The centrist "method" - which has no relationship to science, reason or evidence - has continued unabated. People with no knowledge of, or training in, economics confidently recommend discarding economic theory in the name of staking out a middle ground.  
Here is another typical statement - this one related to reform of the financial industry:
Whatever the effects of the bill, among them will be neither an end to the too-big-too-fail doctrine nor any curb on what the sharpest Wall Streeters see as the central threat to the system’s stability: excessive financial leverage. . . .
There are those who reckon that, what with the wailing and gnashing among both the plutocrats and the populists, Obama has actually found the political sweet spot. “Main Street is mad at the president because he’s too close to Wall Street, and Wall Street is mad at him because he’s too populist,” Altman says. “Therefore, almost by definition, he’s in the right place.”
*Sigh* Okay, we had a serious, fundamental flaw with the financial system that caused it to implode. Coming up with a middle-of-the-road solution - on the grounds that it is a middle-of-the-road solution - isn't acceptable. We need to make reforms that actually make sure the financial system doesn't implode again. Just picking something in the middle has nothing to do with achieving this objective.  
Centrism as Intellectual Honesty
So why the tendency to believe that if both sides are upset, we've likely arrived the right decision, without any analysis of the actual issues?
Part of the answer lies in the reaction to extremism - expressed by Jon Stewart above - but part of it comes from a tacit understanding that politicians are influenced by something other than the public good. We like people who "cross party lines" because we think it means they're intellectually honest and not beholden to a political party. We like people who draw ire from both sides of an issue because we think it means they're acting for the people and not for special interests.  
Although I certainly value intellectual honesty, I haven't found bi-partisanship or centrism to be a mark of intellectual honesty.      
Take the Wall Street versus Main Street example: Wall Street's interest is clear, the less regulation the better. But what is Main Street's interest? A financial system that doesn't melt down. The public good isn't always in the middle. In this case, legislators pushing things towards the center are motivated by currying favor with Wall Street, not by the public good. In fact, now that I'm tuned into the issue, I would argue that bi-partisanship is most often the result of intense lobbying. There's nothing like a truckload of lobbying money to make politicians get all Maverick-y.      
At this point - far from being a mark of intellectual honesty - centrism is a political strategy that is often knowingly employed contra the public interest:
Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. . . .
This is basically the opposite of what I think most centrists really want - which is politicians that act in the public's best interest and not according to political strategy or special interests.
American politicians don't care much about voters with moderate incomes. Princeton political scientist Larry Bartels studied the voting behavior of US senators in the early '90s and discovered that they respond far more to the desires of high-income groups than to anyone else. By itself, that's not a surprise. He also found that Republicans don't respond at all to the desires of voters with modest incomes. Maybe that's not a surprise, either. But this should be: Bartels found that Democratic senators don't respond to the desires of these voters, either. At all.
So, it's not that politicians are too often influenced by special interests - it's that politicians are always influenced by special interests.
In my opinion, the centrist desire for politicians not to be beholden to special interest groups is akin to the desire to have viable third party candidates - it would be great, but it's structurally impossible. I would assert that two-party politics is almost entirely special interest politics - in fact, the degree to which it's not is so insignificant as to be negligible.
The Real Battle
These two sources of centrism - anti-extremism and the desire for intellectual honesty - are related. But in both cases, the centrist senses the problem, but vastly underestimates its scope.
The problem with red-faced, batshit crazy emotionalism is really anti-rationality. There is no engaging a movement that is impervious to logic and unconvinced by evidence. Short of violence, the only recourse is mockery - which is why, I believe, comedians such as Jon Stewart and Stephen Colbert have become so important.    
What I slowly came to realize is that anti-rationality is much more widespread than the red-faced emotionalism of the fringe. Anti-rationality is everywhere. It has infected not just Fox news, but our political discourse and the mainstream media. Of course, in mainstream debates, anti-rationality doesn't manifest in the form of base emotional appeals. Instead, politicians and supposedly serious media outlets are overrun with pseudo science and sophistry. The supposed "science" of Big Tobaccoglobal warming denialismjunk economics and blatant revisionist history don't just slip through the cracks every now and then, anti-rationality has truly become the new normal.  
So why so much anti-rationality? And not just at the fringe, but in the mainstream media.  
As I was coming to recognize the degree to which our discourse is overrun with anti-rationality, it was discovered that the Tea Party was not a grassroots populist movement, but rather, a Koch-funded astroturf organization. The Kochs - one of the biggest funders of global warming denialism - orchestrated the Tea Party. And the Kochs aren't just interested in "debunking" global warming - the Kochs are everywhere: The Heritage Foundation, the Cato Institute, Mercatus Center, Reason Magazine, Americans for Prosperity, Freedomworks, ALEC and on and on and on. As radical free market fundamentalists, they have put billions into fighting environmental regulation, thwarting health care reform, union busting, destroying public schools and, of course, opposing taxation on corporations and the wealthy. Once I understood the connection between the Tea Party and the Kochs, I could see that extremist emotionalism and the anti-rationality in our discourse are related - they are all forms of oligarchical propaganda. And I am convinced that this is the real threat - not extremism, but oligarchs.
It took me some time to reach this conclusion because anti-rationality is too widespread to pin on propaganda. While this is undoubtedly true, the critical distinction is this: Most forms of anti-rationality do not drive public policy and political discourse. And that's the key - I have come to believe that when public policy and political discourse are being set contra sound sciencebillionaires are at work. (Or religious fundamentalists, but the political influence of religious fundamentalists is the result of their usefulness to billionaires).  
And this is where I am now: The red-faced emotionalism of the Tea Party is a frightening symptom - I was right about that - but extremism is not the disease and centrism is clearly not the cure. Politically active billionaires have intentionally decimated the American middle class. I do not believe we arrived at a New Gilded Age by accident. The goal of the oligarchs - as explicitly stated by the billionaire-funded Heritage Foundation - is to dismantle the New Deal and the Great Society.  They are succeeding. And as Naomi Klein predicted, they are using economic crisis as an excuse to push through policies that wouldn't otherwise have support.
If this is correct - if we are in an emerging oligarchy - centrism isn't just an ineffective opposition, centrism is complicit. Its fixation with balance assures at least equal time for blatant propaganda. Perhaps more importantly, apathy is baked in. Because centrists define themselves in opposition to extremism and emotionalism, they are not comfortable with activism. Centrists are simply not comfortable taking to the streets - that's what our avowed opposition does. Centrists seem incapable of outrage, even when outrage is clearly appropriate.      
In the wake of 9/11, Jon Stewart argued that the liberal/conservative battle didn't matter anymore and that the real battle was between extremists and moderates.  But now, in the wake of a Wall Street-created financial collapse and several years into the Lesser Depression, I would suggest the extremist/moderate battle doesn't matter anymore. The real battle now is between the billionaire oligarchs and the American people.
Cross-posted at Daily Kos