President Obama has been in office for less than two months and already he has many plans in motion and is projecting an image of confidence in the middle of an extremely shaky economic situation. Also, his plans assume and depend on an eventual recovery of the economy. The nature of this recovery has not been defined but it seems like it is assumed to be a return to previous "normal" levels. Does this mean 2006 levels for various indicators, the housing market, etc.? I'm not sure, but I'm pretty sure it doesn't mean a significant reduction in standard of living, or a drastic change in lifestyle.
However, it sure seems like we must expect a much lower level of consumption and personal spending, because the money that was driving all of this (the housing bubble) never really existed.
So the President's plans are going to meet an economic reality that is much worse than he and everyone else is expecting, although I give him a lot of credit for really trying to be realistic about his budget and numbers. The problem is, he happens to have arrived at a moment in history when a big change is required, and people aren't prepared to think this way.
So either he knows this and for political reasons can't say it yet, or he doesn't know this and will be blind-sided by it.