- Democratic party identification is at a 50-year low;
- Independents disapprove of his job performance;
- He has poor approval ratings on key issues (including health care).
At this point, Obama is a prisoner to events. He needs a substantial, noticeable improvement in the economy, specifically as independent voters experience it, to have a decent shot at reelection. And beyond that, his health care bill remains extremely unpopular, and the deficit is bound to remain an issue next year. So, he has a lot of fundamental challenges. Assuming that his macro-position does not improve (and the Republicans nominate a reasonably acceptable candidate), the data at this point indicate that he would have a very difficult time winning reelection next year.
At The Atlantic, Derek Thompson points out that a big cut in spending would not help POTUS:
First, real disposable income isn't growing. Wages are falling behind inflation, and there's little reason to think that cutting spending will change that picture. Second, as Washington reins in spending, total government jobs will continue to fall below the private sector. Government is supposed to be a crutch for the private sector, but it's becoming a hurdle for national employment. Third, multinational corporations, which are growing faster than the overall economy, have repeatedly warned that premature government tightening could "risk triggering another recession [that] would likely result in excessive unemployment." A grand bargain might seem like smart politics for the administration, but if it hurts the economy, it'll come around and look like bad politics in 2012.