Because none of the current players were involved in what happened. Reggie Bush allegedly received benefits from a 3rd party (not USC). I get it, USC should have known about it. Punish us, but not this badly. Two years of bowl games? 20 scholarships?
From what I've read, a big reason why it's so harsh is that the NCAA sees USC a "repeat offender."
Obviously the NCAA wanted to punish them financially, and what better way to do that than a post-season ban?
That being said, I think that's a horrible thing to do to those kids. Take away the scholarships, but to put a ban on the post-season? That hurts the kids more than the University, in my opinion.