Reading between the lines with Obama can reveal some frightening stuff.
Notice when he brought up "deficit reduction" at the end. He said something along the lines that he hopes his opposition is serious and that it isn't all political. This is huge tax increases on the horizon folks and he is working up the talking points against republicans who will naturally oppose it. When he alluded to cuts in spending the only example he could come up with referred to Sec. Gates and defense spending. Cutting programs that "don't work."
So after the dems went on a whirlwind spending spree he is going to keep the status quo with no further increase in these various department's increased budgets? Sounds like they will be allowed to remain in their bloated state. This will give Obama some kind of cover that he did something while the only department that will be slashed is Defense. Also crushing tax increases will be imposed giving the dems their "utopia" that they have always sought in the first place. Huge government, high taxes with paltry military spending.
There is more than one road to the liberal paradise.