Several reasons, not that I really care about the NBA that much, it's my least favorite of the major leagues. Ranks down there with Major League Lacrosse.
Anyways, first, lack of true desire from most NBA players. The first couple of "Dream Teams" truly embraced playing for the USA in international competition. They took it seriously in training and in games and it showed. I wholeheartedly disagree that Magic, Bird, Jordan and the rest of the 1992 Dream Team played without desire, heart or love of country. Every other "team" since hasn't shown any of the three. Those pros who didn't put 100% into it or didn't even bother (next section) are a disgrace to the country. Seriously, it should be an honor to represent your country, whether it be in the military or in a sporting competition. The college kids and the first dream team understood that, the pros in recent years don't.
Second, fielding a second tier team. Where was Kobe? Vince? T-Mac? A.I.? Kevin Garnett? Tim Duncan? Shaq is at least hurt I think, but I'm not sure he was invited. Kobe flat out turned down the offer to play. I don't know about the rest of the players I mentioned. I do know that in hockey and football (soccer, I mean) when the national team calls you up to play in a tournament, especially the world championship, it's a HUGE honor and you typically do not decline. Also, you bring your A players, not your B players.
Third, George Karl. WTF kinda selection was this? His Bucks folded in the second half of the season. No team chemistry. He had no control. Same thing with this US team.
I think all three factors contributed, as well as the Argentines and Yugoslavs playing fantastic basketball (Argentina has 3 NBA calibre players, one starting this season, two former and Yugoslavia has 5 according to espn.) I'd say I know how Portugal felt in the World Cup, but they brought their A team to play and lost. We played on our home turf with a B team that didn't care (I include Karl in that), and lost because of it.
I want the best representing our country in competition. I just wish the best wanted to represent our country in basketball.