You know, there are times in the military (usually just before promotion time) that the higher ups do a whole bunch of ass kissing and inflate their reports to make them look better than what they actually were. Saw it happen, even had to type some of the reports and evaluations.
Now, the reports were being inflated and made to look better than what really was happening by those on the ground, because they knew it was going to eventually get to DC, and well........those stars aren't going to put themselves on.
No, Obama didn't know what was going on, he was getting the same BS that everyone else back in DC was getting, which was inflated reports from the commanders in Iraq.
How is it Obama's fault when it's the generals that are looking to get promoted and make themselves look better than what they are actually doing?