The idealization of reality can be seen in the implementation of a wide variety of policies. Welfare is a good example. When the Democrats implemented welfare in the form it had from the '60s through the late '90s it was part of the great society reforms and meant to be an important step in the war on poverty. The idea is simple and attractive, if people can't get a job they shouldn't have to starve and we can keep them alive and at least somewhat comfortable with a small government stipend. Naturally nobody would want to live like that so people will get off welfare when they can. Poof, we've just eliminated absolute destitution and death by starvation in our society. Beautiful. The thing is, welfare does provide something of a comfortable life. Oh I have no pretenses that a life on welfare is not a life of grinding poverty, but it's also a life with food in the cabinets and, often, cable TV. It's a liveable life. Now compare that to life with a minimum wage job, where income is increased (less than one might think since some benefits are lost) slightly but work is moved from 0 hours a week to 40. For a lot of people welfare was more attractive, and thus the rolls increased over time and proved not only a drain on the public coffers but also a bane to those who were trapped in the welfare cycle, living lives without ambition or opportunity perpetually at the bottom of the ladder and perpetuating the cycle by having too many children too soon and living in bad neighborhoods.
The Democrats made the assumption that people would recognize that very few workers stay at minimum wage for their whole lives (until recently) and would be willing to put up with a few years of low pay and high work in exchange for future benefits. Some were, some weren't. There wasn't much done to roust the ones who weren't.
Of course welfare reform in the way it came off is, in some ways, just as bad. Cutting off all benefits after 5 years is a good motivator for people to go out and get a job, but it's not a good way to help people build the necessary skills and experience to cope and survive in a difficult economy. There have been stories of people who've left the welfare rolls, but at great personal cost in terms of time with their children and chances at future advancement. The Republican plan makes unrealistic assumptions about the capacities of people on welfare (most are capable of working, some do not have the necessary coping skills to work far away and still care for their responsibilities) and mostly about the job market. They assume that there are enough decent jobs to absorb everyone on the rolls. I can tell you from experience that there aren't even enough decent jobs for graduates from good colleges. There are also matters like childcare and medical care that need to be addressed and benefits that employers are no longer offering, especially to those on the very bottom of the ladder.
What do I think the answer is? I'm not sure. I'd bet that if you structured the welfare system so that people lost $3 of benefits for every $10 earned it would be a fairly painless transition, especially if some of the saved money was spent on providing necessary services to help people get back on their feet. Some states do this, some better than others, but the federal government continues to treat the neediest among us with unrealisticly rosey expectations.
Of course I don't mean to look only at welfare. We can find examples of unrealistically cheerful policy throughout the various policy areas of government. Bush's 'voluntary' environmental standards, lowball estimates on the costs of almost every program that's ever been proposed as well as highball estimates on the earnings from any change in revenue collection techniques (remember when the tax cuts were supposed to INCREASE overall revenue by stimulating the economy?) Trickle down economics, a ludicrously low IRS enforcement budget, don't ask don't tell, etc...etc...
One could, and I have, make a reasonable argument that what drives this behavior is not, in fact, assumptions about human nature but instead greed and corruption. It's easier to justify a project when you lowball its cost and big tax cuts for the rich sound great if you promise economic expansion in the 5-7% range complete with wage hikes and increased hirings. On the other hand there are people who truly believe in some remarkably poor programs and I think that idealization is probably at least part of the reason why. It makes sense if you think about it. We need a government that makes realistic decisions and choices. That means accepting that sometimes the private sector fails and people do need public assistance while also making provisions to prevent public assistance from becoming a way of life. That means possessing a military capable of defending America against its myriad enemies while also accepting that we desperately need to control defense spending (The F-22 Lightning is another example of pie in the sky spending. It's the most advanced fighter plane on earth at a time when the F-16 was perfectly adequate. Its proponents state that it will give us air superiority for years, but it won't. Technology has a shelf life and by the time we need a new fighter plane to combat some new conventional military menace I can all but guarantee that the F-22 will be outdated. Once it exists our enemies can copy and improve upon its design. We've raised the bar unneccesarily and it will go down as a big waste of money.) We need a government that recognizes that you can't plan 10 years into the future in Washington because nobody's ever in power for 10 years (individual congressmen and senators are, but not parties as a whole, not in the modern era) and new presidents and congresses will want to put their stamps on things. When Bush and Kerry unveil plans that will solve the defecit in 10 years or cut the estate tax in 10 years for one it's just plain nuts. Those things aren't going to last that long unaltered.
It's easy for government to make bad assumptions and act on unrealistic premesis because there's no accountability. Government can just tax more when the horrible medicare discount cards are released (with totally unrealistic expectations on the ability of most seniors to cope with extremely complicated bureaucratic hoops to jump through in order to find the one that's right for them. Also an assumption that companies, which can change the terms on seniors who have picked them without the seniors being able to jump to a competitor, will act in good faith and not slash benefits once they have sufficient subscribers etc...etc...) to make up the $130 billion difference between initial and current estimates. It can just borrow more when the tax cuts torpedo revenues to the point of us now running the largest deficit in history and Bush proudly announcing that he's going to cut it in half in five years when we DIDN'T HAVE A DEFECIT WHEN HE TOOK OFFICE.
I don't know if there is a way to make policy makers more focused on the present and making decisions that take reality rather than best-case-scenarios into account. I do know that it's necessary if we want to solve the problems of education, military overspending, and environmental protection, let alone universal healthcare. Washington needs to get real, and fast.