There are several schools of thought circulating about what to do, assuming nothing is actually going to happen on the lawmaking side:
1. Run on his record. Accept the "referendum" argument.
This seems to be the choice of the president's most ardent supporters. Go out and throw the laundry list of bills at folks and convince them that things are getting better and we are on the right track (despite the glaringly lopsided right track/wrong track numbers). Seems to me Mitt Romney would love to just have the election be about the presidents record, especially on unemployment and housing.
This option basically assumes that most if not all of the folks who voted for Obama last time will show up and vote for him again. If only they are informed about just how much good he's done. This strategy assumes that the economy will continue to improve. Think Reagan '84.
2. The choice/vision debate.
This seems to be the choice of the president himself. Basically, the president wishes to have a public debate with Mitt Romney over policy. Mitt wants to do this, I want to do that. Basically running as if he were not the incumbent. Thus we get the "forward" slogan and a rehash of the "dont give them back the keys" message we heard from him in 2010.
This option basically assumes that the electorate will be the same size as it was last time, with swing voters being the key to a close victory. He wont get as many swing voters as last time, but they will show up. A key component of this involves running against "obstructionism" in Congress. Basically a rehash of the 2010 message writ large. Bill Clinton likes this strategy. This strategy assumes that the economy will continue to improve. It's a policy/wonky message. Think Clinton '96.
3. Demonize Romney.
This basically involves making Mitt Romney unacceptable for the oval office. It is a deeply negative message that seeks to gin up the base Democratic voters by making them afraid of Mitt Romney and scaring the bejesus out of swing voters. It also involves identifying the Republican Party as a crazy hate group. (This is the strategy I prefer, of course.)
This assumes that electorate is essentially turned off this year and will be smaller than the 2008 electorate. It assumes a much more traditional partisan election, won with heavy turnout of base voters and leaners over swing voters. This strategy basically assumes the economy will not improve, and may in fact decline. Think Bush '04.
I don't know where we are going to be just five months from now. I do know that there is a significant number of people who will be for and against Obama no matter what happens. I have no idea if those folks are going to show up in big numbers or not, but the Wisconsin recall election should tell us something.
I do know this though: this election isn't going to be fun, it isn't going to be enjoyable, and there's gonna be plenty of blood on the floor no matter who wins in November. I think we can beat Mitt Romney no matter how bad the economic picture is, IF we are willing to do some rather ruthless things. Which I doubt we will do. Democrats would generally rather lose with dignity while Republicans have no problem winning dirty.
The way I see it, there will be corporate spending unchecked, ballot box shenanigans galore, dirty tricks out the yin-yang, and probably some good old fashioned ballot stuffing to boot in places like Ohio, Virginia, and Florida where the GOP runs everything. I suspect a lot of people in this country have simply thrown up their hands. There will be even more of them after the GOP Super PAC's get done.
The Obama campaign has thought through these things and they'll do what they think is best for President Obama. I hope. But I do know for sure that unless we get a bit of extraordinary luck, we may be in for something that looks a lot more like 2000 than 2008. A nailbiter right down to a couple of votes in one state.