What makes Obama a "Socialist"?

It works on a small scale. Research Kibbutzims, the Mondragon co-op, and worker self management. Socialism, as it was originally argued, had less to do with the role of government, and it had more to do with workers owning the means of production and not being at the mercy of a capital class. This can be done without state intervention and works best without it. In fact, the first schism in socialist thought was between Bakunin and Marx over the role of government. Marx argued that government was necessary for a transition to a state of anarcho-communism, and Bakunin argued that the role of the state should be bi-passed altogether in achieving socialism because he saw all concentrations of power as being dangerous, whether relating to government or concentrated capital..

Much of what's argued as "socialism" in the US from ignorant liberals and conservatives is really social democracy, the idea of which isn't the abolition of class structures, but the implementation of a restrained form of capitalism that seeks to keep the gap between the rich and the poor from widening to gross levels of poverty like you see in third world countries or like there was in America in the late 19th and early 20th century.