Interview With Tim Russert Broadcast on NBC's "Meet the Press"

TIM RUSSERT: And we are in the Oval Office this morning with the President of the United States. Mr. President, welcome back to "Meet The Press."

THE PRESIDENT: Thank you, sir.

RUSSERT: On Friday, you announced a committee, commission to look into intelligence failures regarding the Iraq war and our entire intelligence community. You have been reluctant to do that for some time. Why?

THE PRESIDENT: Well, first let me kind of step back and talk about intelligence in general, if I might. Intelligence is a vital part of fighting and winning the war against the terrorists. It is - because the war against terrorists is a war against individuals who hide in caves in remote parts of the world, individuals who have these kind of shadowy networks, individuals who deal with rogue nations. So, we need a good intelligence system. We need really good intelligence.

So, the commission I set up is to obviously analyze what went right or what went wrong with the Iraqi intelligence. It was kind of lessons learned. But it's really set up to make sure the intelligence services provide as good a product as possible for future presidents as well. This is just a part of analyzing where we are on the war against terror.

There is a lot of investigations going on about the intelligence service, particularly in the Congress, and that's good as well. The Congress has got the capacity to look at the intelligence gathering without giving away state secrets, and I look forward to all the investigations and looks.

Again, I repeat to you, the capacity to have good intelligence means that a president can make good calls about fighting this war on terror.

RUSSERT: Prime Minister Blair has set up a similar commission in Great Britain.

THE PRESIDENT: Yeah.

RUSSERT: His is going to report back in July.

THE PRESIDENT: Right.

RUSSERT: Ours is not going to be until March of 2005, five months after the presidential election.

THE PRESIDENT: Yeah.

RUSSERT: Shouldn't the American people have the benefit of the commission before the election?

THE PRESIDENT: Well, the reason why we gave it time is because we didn't want it to be hurried. This is a strategic look, kind of a big-picture look about the intelligence-gathering capacities of the United States of America, whether it be the capacity to gather intelligence in North Korea or how we've used our intelligence to, for example, learn more information about A.Q. Khan. And it's important that this investigation take its time.

Now, look, we are in a political season. I fully understand people - He's trying to avoid responsibility. There is going to be ample time for the American people to assess whether or not I made a - good calls, whether or not I used good judgment, whether or not I made the right decision in removing Saddam Hussein from power, and I look forward to that debate, and I look forward to talking to the American people about why I made the decisions I made.

The commission I set up, Tim, is one that will help future presidents understand how best to fight the war on terror, and it's an important part of the kind of lessons learned in Iraq and lessons learned in Afghanistan prior to us going in, lessons learned that we can apply to both Iran and North Korea because we still have a dangerous world. And that's very important for, I think, the people to understand where I'm coming from to know that this is a dangerous world. I wish it wasn't.

I'm a war president. I make decisions here in the Oval Office in foreign-policy matters with war on my mind. Again, I wish it wasn't true, but it is true. And the American people need to know they got a president who sees the world the way it is. And I see dangers that exist, and it's important for us to deal with them.

RUSSERT: Will you testify before the commission?

THE PRESIDENT: This commission? You know, testify? I mean, I'd be glad to visit with them. I'd be glad to share with them knowledge. I'd be glad to make recommendations, if they ask for some.

I'm interested in getting - I'm interested in making sure the intelligence gathering works well.

Listen, we got some fine - let me - let me, again, just give you a sense of where I am on the intelligence systems of America. First of all, I strongly believe the CIA is ably led by George Tenet. He comes and briefs me on a regular basis about what he and his analysts see in the world.

RUSSERT: His job is not in jeopardy?

THE PRESIDENT: No, not at all, not at all. We've got people working hard in intelligence gathering around the world to get as good an information as possible.

Intelligence requires, you know, all kinds of assets to bring information to the President, and I want that intelligence service to be strong, viable, competent, confident, and provide good product to the President so I can make judgment calls.

RUSSERT: There's another commission right now looking into September 11th.

THE PRESIDENT: Yeah.

RUSSERT: Will you testify before that commission?

THE PRESIDENT: We have given extraordinary cooperation with Chairmen Kean and Hamilton. As you know, we made an agreement on what's called "Presidential Daily Briefs," so they could see the information the CIA provided me that is unique, by the way, to have provided what's called the PDB, because -

RUSSERT: Presidential Daily Brief?

THE PRESIDENT: Right.

And see, the danger of allowing for information that I get briefed on out in the public arena is that it could mean that the product that I receive or future presidents receive is somewhat guarded for fear of - for fear of it being revealed, and for fear of people saying, "Well, you know, we're going to second-guess that which you told the President."

I need good, honest information, but we have shared this information with both those gentlemen, gentlemen I trust, so they could get a better picture of what took place prior to September the 11th.

And again, we want - I want the truth to be known. I want there to be a full analysis done so that we can better prepare the homeland, for example, against what might occur.

And this is all in the context of war, and the more we learn about, you know, what took place in the past, the more we're going to be able to better prepare for future attacks.

RUSSERT: Would you submit for questioning, though, to the 9/11 Commission?

THE PRESIDENT: Perhaps, perhaps.

RUSSERT: Senator Charles Grassley, a Republican -

THE PRESIDENT: Yes.

RUSSERT: - said he is absolutely convinced we will capture Osama bin Laden before the election.

THE PRESIDENT: Well, I appreciate his optimism. I have no idea whether we will capture or bring him to justice, may be the best way to put it. I know we are on the hunt, and Osama bin Laden is a cold-blooded killer, and he represents the nature of the enemy that we face.

These are - these are people that will kill on a moment's notice, and they'll kill innocent women and children. And he's hiding, and we're trying to find him.

There's a - I know there is a lot of focus on Iraq, and there should be, but we've got thousands of troops, agents, allies on the hunt, and we're doing a pretty good job of dismantling al-Qaida - better than a pretty good job, a very good job. I keep saying in my speeches, two-thirds of known al-Qaida leaders have been captured or killed, and that's the truth.

RUSSERT: Do we have a pretty good idea where Osama is?

THE PRESIDENT: You know, I'm not going to comment on that.

RUSSERT: Let me turn to Iraq. And this is the whole idea of what you based your decision to go to war on.

THE PRESIDENT: Sure, sure.

RUSSERT: The night you took the country to war, March 17th, you said this: "Intelligence gathered by this and other governments leaves no doubt that the Iraq regime continues to possess and conceal some of the most lethal weapons ever devised."

THE PRESIDENT: Right.

RUSSERT: That apparently is not the case.

THE PRESIDENT: Correct.

RUSSERT: How do you respond to critics who say that you brought the nation to war under false pretenses?

THE PRESIDENT: Yes. First of all, I expected to find the weapons. Sitting behind this desk making a very difficult decision of war and peace, and I based my decision on the best intelligence possible, intelligence that had been gathered over the years, intelligence that not only our analysts thought was valid but analysts from other countries thought were valid.

And I made a decision based upon that intelligence in the context of the war against terror. In other words, we were attacked, and therefore every threat had to be reanalyzed. Every threat had to be looked at. Every potential harm to America had to be judged in the context of this war on terror.

And I made the decision, obviously, to take our case to the international community in the hopes that we could do this - achieve a disarmament of Saddam Hussein peacefully. In other words, we looked at the intelligence. And we remembered the fact that he had used weapons, which meant he had had weapons. We knew the fact that he was paying for suicide bombers. We knew the fact he was funding terrorist groups. In other words, he was a dangerous man. And that was the intelligence I was using prior to the run up to this war.

Now, let me - which is - this is a vital question -

RUSSERT: Nothing more important.

THE PRESIDENT: Vital question.

And so we - I expected there to be stockpiles of weapons. But David Kay has found the capacity to produce weapons. Now, when David Kay goes in and says we haven't found stockpiles yet, and there's theories as to where the weapons went. They could have been destroyed during the war. Saddam and his henchmen could have destroyed them as we entered into Iraq. They could be hidden. They could have been transported to another country, and we'll find out. That's what the Iraqi Survey Group - let me - let me finish here.

But David Kay did report to the American people that Saddam had the capacity to make weapons. Saddam Hussein was dangerous with weapons. Saddam Hussein was dangerous with the ability to make weapons. He was a dangerous man in the dangerous part of the world.

And I made the decision to go to the United Nations.

By the way, quoting a lot of their data - in other words, this is unaccounted for stockpiles that you thought he had because I don't think America can stand by and hope for the best from a madman, and I believe it is essential - I believe it is essential - that when we see a threat, we deal with those threats before they become imminent. It's too late if they become imminent. It's too late in this new kind of war, and so that's why I made the decision I made.

RUSSERT: Mr. President, the Director of the CIA said that his briefings had qualifiers and caveats, but when you spoke to the country, you said "there is no doubt." When Vice President Cheney spoke to the country, he said "there is no doubt." Secretary Powell, "no doubt." Secretary Rumsfeld, "no doubt, we know where the weapons are." You said, quote, "The Iraqi regime is a threat of unique urgency." "Saddam Hussein is a threat that we must deal with as quickly as possible."

You gave the clear sense that this was an immediate threat that must be dealt with.

THE PRESIDENT: I think, if I might remind you that in my language I called it a grave and gathering threat, but I don't want to get into word contests. But what I do want to share with you is my sentiment at the time. There was no doubt in my mind that Saddam Hussein was a danger to America. No doubt.

RUSSERT: In what way?

THE PRESIDENT: Well, because he had the capacity to have a weapon, make a weapon. We thought he had weapons. The international community thought he had weapons. But he had the capacity to make a weapon and then let that weapon fall into the hands of a shadowy terrorist network.

It's important for people to understand the context in which I made a decision here in the Oval Office. I'm dealing with a world in which we have gotten struck by terrorists with airplanes, and we get intelligence saying that there is, you know, we want to harm America. And the worst nightmare scenario for any president is to realize that these kind of terrorist networks had the capacity to arm up with some of these deadly weapons, and then strike us.

And the President of the United States' most solemn responsibility is to keep this country secure. And the man was a threat, and we dealt with him, and we dealt with him because we cannot hope for the best. We can't say, "Let's don't deal with Saddam Hussein. Let's hope he changes his stripes, or let's trust in the goodwill of Saddam Hussein. Let's let us, kind of, try to contain him." Containment doesn't work with a man who is a madman.

And remember, Tim, he had used weapons against his own people.

RUSSERT: But can you launch a pre-emptive war without iron-clad, absolute intelligence that he had weapons of mass destruction?

THE PRESIDENT: Let me take a step back for a second and - there is no such thing necessarily in a dictatorial regime of iron-clad absolutely solid evidence. The evidence I had was the best possible evidence that he had a weapon.

RUSSERT: But it may have been wrong.

THE PRESIDENT: Well, but what wasn't wrong was the fact that he had the ability to make a weapon. That wasn't right.

RUSSERT: This is an important point because when you say that he has biological and chemical weapons and unmanned aerial vehicles -

THE PRESIDENT: Which he had.

RUSSERT: - and they could come and attack the United States, you're saying to the American people: we have to deal now with a man who has these things.

THE PRESIDENT: That's exactly what I said.

RUSSERT: And if that's not the case, do you believe if you had gone to the Congress and said he should be removed because he's a threat to his people but I'm not sure he has weapons of mass destruction, Congress would authorize war?

THE PRESIDENT: I went to Congress with the same intelligence - Congress saw the same intelligence I had, and they looked at exactly what I looked at, and they made an informed judgment based upon the information that I had. The same information, by the way, that my predecessor had. And all of us, you know, made this judgment that Saddam Hussein needed to be removed.

You mentioned "pre-emption." If I might, I went to the United Nations and said, "Here is what we know, you know, at this moment, and you need to act. After all, you are the body that issued resolution after resolution after resolution, and he ignored those resolutions."

So, in other words, when you say "pre-emption," it almost sounds like, "Well, Mr. President, you decided to move." What I decided to do was to go to the international community and see if we could not disarm Saddam Hussein peacefully through international pressure.

You remember U.N. Security Council Resolution 1441 clearly stated "show us your arms and destroy them, or your programs and destroy them." And we said, "There are serious consequences if you don't" and that was a unanimous verdict. In other words, the worlds of the U.N. Security Council said we're unanimous and you're a danger. So, it wasn't just me and the United States. The world thought he was dangerous and needed to be disarmed.

And, of course, he defied the world once again.

In my judgment, when the United States says there will be serious consequences, and if there isn't serious consequences, it creates adverse consequences. People look at us and say, they don't mean what they say, they are not willing to follow through.

And by the way, by clearly stating policy, whether it be in Afghanistan or stating the policy that we expect you, Mr. Saddam Hussein, to disarm, your choice to disarm, but if you don't, there will be serious consequences in following through, it has had positive effects in the world. Libya, for example, there was an positive effect in Libya where Moammar Khaddafy voluntarily disclosed his weapons programs and agreed to dismantle - dismantle them, and the world is a better place as a result of that. And the world is a safer and better place as a result of Saddam Hussein not being in power.

RUSSERT: There's a sense in the country that the intelligence that was given was ambiguous, and that you took it and molded it and shaped it - your opponents have said "hyped" it - and rushed to war.

THE PRESIDENT: Yeah.

RUSSERT: And now, in the world, if you, in the future, say we must go into North Korea or we must go into Iran because they have nuclear capability, either this country or the world will say, "Excuse you, Mr. President, we want it now in hard, cold facts."

THE PRESIDENT: Well, Tim, I and my team took the intelligence that was available to us and we analyzed it, and it clearly said Saddam Hussein was a threat to America.

Now, I know I'm getting repetitive, but I'm just trying to make sure you understand the context in which I was making decisions.

He had used weapons. He had manufactured weapons. He had funded suicide bombers into Israel. He had terrorist connections. In other words, all of those ingredients said to me: Threat.

The fundamental question is: Do you deal with the threat once you see it? What - in the war on terror, how do you deal with threats? I dealt with the threat by taking the case to the world and said, "Let's deal with this. We must deal with it now."

I repeat to you what I strongly believe that inaction in Iraq would have emboldened Saddam Hussein. He could have developed a nuclear weapon over time - I'm not saying immediately, but over time - which would then have put us in what position? We would have been in a position of blackmail.

In other words, you can't rely upon a madman, and he was a madman. You can't rely upon him making rational decisions when it comes to war and peace, and it's too late, in my judgment, when a madman who has got terrorist connections is able to act.

RUSSERT: But there are lots of madmen in the world, Fidel Castro ...

THE PRESIDENT: True.

RUSSERT: ... in Iran, in North Korea, in Burma, and yet we don't go in and take down those governments.

THE PRESIDENT: Correct, and I could - that's a legitimate question as to why we like felt we needed to use force in Iraq and not in North Korea. And the reason why I felt like we needed to use force in Iraq and not in North Korea, because we had run the diplomatic string in Iraq. As a matter of fact, failed diplomacy could embolden Saddam Hussein in the face of this war we're in. In Iraq - I mean, in North Korea, excuse me, the diplomacy is just beginning. We're making good progress in North Korea.

As I've said in my speeches, every situation requires a different response and a different analysis, and so in Iran there is no question they're in danger, but the international community is now trying to convince Iran to get rid of its nuclear weapons program. And on the Korean peninsula, now the United States and China, along with South Korea and Japan and Russia, are sending a clear message to Kim Jung Il, if you are interested in a different relationship, disclose and destroy your program in a transparent way.

In other words, the policy of this administration is to be - is to be clear and straightforward and to be realistic about the different threats that we face.

RUSSERT: On Iraq, the vice president said, "we would be greeted as liberators."

THE PRESIDENT: Yeah.

RUSSERT: It's now nearly a year, and we are in a very difficult situation. Did we miscalculate how we would be treated and received in Iraq?

THE PRESIDENT: Well, I think we are welcomed in Iraq. I'm not exactly sure, because the tone of your question is, we're not. We are welcomed in Iraq.

RUSSERT: Are you surprised by the level and intensity of resistance?

THE PRESIDENT: No, I'm not. And the reason I'm not surprised is because there are people in that part of the world who recognize what a free Iraq will mean in the war on terror. In other words, there are people who desperately want to stop the advance of freedom and democracy because freedom and democracy will be a powerful long-term deterrent to terrorist activities.

See, free societies are societies that don't develop weapons of mass terror and don't blackmail the world.

If I could share some stories with you about some of the people I have seen from Iraq, the leaders from Iraq, there is no question in my mind that people that I have seen at least are thrilled with the activities we've taken. There is a nervousness about their future, however.

RUSSERT: If the Iraqi people choose -

THE PRESIDENT: Well, let me finish on the nervousness. I don't want to leave it on that note.

There's nervousness because they're not exactly sure what their form of government will look like, and there is - you can understand why. In nine months' time, there's - we're now saying, democracy must flourish. And as I recall from my history, it took us quite a while here in the United States, but nevertheless we are making progress.

And so, when you see the debate and the discussion about freedom, those are welcoming signs as far as I'm concerned. People are saying how best to develop this system so that we're free and minority rights are protected.

RUSSERT: If the Iraqis choose, however, an Islamic extremist regime, would you accept that, and would that be better for the United States than Saddam Hussein?

THE PRESIDENT: They're not going to develop that. And the reason I can say that is because I'm very aware of this basic law they're writing. They're not going to develop that because right here in the Oval Office I sat down with Mr. Pachachi and Chalabi and al-Hakim, people from different parts of the country that have made the firm commitment, that they want a constitution eventually written that recognizes minority rights and freedom of religion.

I remember speaking to Mr. al-Hakim here, who is a fellow who has lost 63 family members during the Saddam reign. His brother was one of the people that was assassinated early on in this past year. I expected to see a very bitter person. If 63 members of your family had been killed by a group of people, you'd be a little bitter. He obviously was concerned, but he - I said, you know, "I'm a Methodist, what are my chances of success in your country and your vision?" And he said, "It's going to be a free society where you can worship freely." This is a Shiia fellow.

And my only point to you is these people are committed to a pluralistic society. And it's not going to be easy. The road to democracy is bumpy. It's bumpy particularly because these are folks that have been terrorized, tortured, brutalized by Saddam Hussein.

RUSSERT: You do seem to have changed your mind from the 2000 campaign. In a debate, you said, "I don't think our troops ought to be used for what's called 'nation-building.'"

THE PRESIDENT: Yeah.

RUSSERT: We clearly are involved in nation-building.

THE PRESIDENT: Right. And I also said - let me put it in context. I'm not suggesting you're pulling one of these Washington tricks where you leave half the equation out.

But I did say also that our troops must be trained and prepared to fight and win war and, therefore, make peace more possible. And our troops were trained to fight and win war, and we did, and a second phase of the war is now going on. The first phase, of course, was the Tommy Franks troop movement.

RUSSERT: But this is nation-building.

THE PRESIDENT: Well, it is. That's right, but we're also fighting a war so that they can build a nation. And [crosstalk] the war is against terrorists and disgruntled Baathists who are saying we had it good in the past, and therefore we don't want this new society to spring up because they have no faith in democracy, and the terrorists who want to stop the advance of freedom.

And if I might, people say to me, "OK, you made a judgment as to how to secure America for the short term with the Taliban and with Saddam Hussein, and with staying on the hunt for al-Qaida, but what about the long term?" Which is a legitimate question. And the best way to secure America for the long term is to promote freedom and a free society and to encourage democracy.

And we're doing so in a part of the world where people say it can't happen, but the long-term vision and the long-term hope is - and I believe it's going to happen - is that a free Iraq will help change the Middle East. You may have heard me say we have a forward strategy of freedom in the Middle East. It's because I believe so strongly that freedom is etched in everybody's heart - I believe that - and I believe this country must continue to lead.

RUSSERT: Are you now willing to allow the United Nations to play a central role in the reconstruction?

THE PRESIDENT: In the recon - in spending our money, no. They don't want to spend our money, the money that was appropriated by the United States Congress I think you're talking about, but they will play a vital role in helping the Iraqis determine the proper course to democracy.

RUSSERT: In transferring power, the U.N. will play a central role?

THE PRESIDENT: Yeah. I call it a vital role because there is a lot of roles being played by different players, but the U.N. will play - and this role is a very important role. It says to the Iraqi citizens who again are trying to figure out the right balance as they head toward this new democracy after years of - after years of being enslaved by a tyrant - how best to do this, and I think it's very helpful to have the stamp of the international community be placed upon the political process.

In terms of reconstruction, of course we want the international community to participate, and they are. There's a lot of participation by the international community in restoring this infrastructure of the country of Iraq that Saddam Hussein had just totally - I shouldn't say "totally," but destroyed a lot of.

RUSSERT: Before we take a break, now that we have determined there are probably not these stockpiles of weapons that we had thought, and the primary rationale for the war had been to disarm Saddam Hussein, Paul Wolfowitz, the Deputy Defense Secretary, said that you had settled on weapons of mass destruction as an issue we could agree on, but there were three. "One was the weapons of mass destruction, the second is the support for terrorism, and third is Saddam's criminal treatment of his Iraqi people."

He said the "third one by itself is a reason to help Iraqis but it's not a reason to put American kids' lives at risk, certainly not on the scale we did."

THE PRESIDENT: Um-hmm.

RUSSERT: Now looking back, in your mind, is it worth the loss of 530 American lives and 3,000 injuries and woundings simply to remove Saddam Hussein, even though there were no weapons of mass destruction?

THE PRESIDENT: Every life is precious. Every person that is willing to sacrifice for this country deserves our praise, and yes.

RUSSERT: Do you think -

THE PRESIDENT: Let me finish.

RUSSERT: Please.

THE PRESIDENT: It's essential that I explain this properly to the parents of those who lost their lives.

Saddam Hussein was dangerous, and I'm not gonna leave him in power and trust a madman. He's a dangerous man. He had the ability to make weapons at the very minimum.

For the parents of the soldiers who have fallen who are listening, David Kay, the weapons inspector, came back and said, "In many ways Iraq was more dangerous than we thought." It's - we're in a war against these terrorists who will bring great harm to America, and I've asked these young ones to sacrifice for that.

A free Iraq will change the world. It's historic times. A free Iraq will make it easier for other children in our own country to grow up in a safer world because in the Middle East is where you find the hatred and violence that enables the enemy to recruit its killers.

And, Tim, as you can tell, I've got a foreign policy that is one that believes America has a responsibility in this world to lead, a responsibility to lead in the war against terror, a responsibility to speak clearly about the threats that we all face, a responsibility to promote freedom, to free people from the clutches of barbaric people such as Saddam Hussein who tortured, mutilated - there were mass graves that we have found- a responsibility to fight AIDS, the pandemic of AIDS, and to feed the hungry. We have a responsibility. To me that is history's call to America. I accept the call and will continue to lead in that direction.

RUSSERT: In light of not finding the weapons of mass destruction, do you believe the war in Iraq is a war of choice or a war of necessity?

THE PRESIDENT: I think that's an interesting question. Please elaborate on that a little bit. A war of choice or a war of necessity? It's a war of necessity. We - in my judgment, we had no choice when we look at the intelligence I looked at that says the man was a threat. And you know, we'll find out about the weapons of mass destruction that we all thought were there. That's part of the Iraqi Survey Group and the group I put together to look at.

But again, I repeat to you, I don't want to sound like a broken record, but David Kay, who is the man who led the Iraqi Survey Group, who has now returned with an interim report, clearly said that the place was a dangerous place. When asked if President Bush had done - had made the right decision, he said yes. In other words, the evidence we have uncovered thus far says we had no choice.

RUSSERT: We're going to take a quick break.

THE PRESIDENT: Thank you.

RUSSERT: We're going to come back and talk to the President a lot more about our world and our economy here at home and the presidential election of 2004. We're in the Oval Office with President George W. Bush.

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RUSSERT: And we are back in the Oval Office talking to the President of the United States.

Mr. President, this campaign is fully engaged. The chairman of the Democratic National Committee, Terence McAuliffe, said this last week: "I look forward to that debate when John Kerry, a war hero with a chest full of medals, is standing next to George Bush, a man who was AWOL in the Alabama National Guard. He didn't show up when he should have showed up..."

THE PRESIDENT: Yeah.

RUSSERT: How do you respond?

THE PRESIDENT: Political season is here. I was - I served in the National Guard. I flew F-102 aircraft. I got an honorable discharge. I've heard this - I've heard this ever since I started running for office. I - I put in my time, proudly so.

I would be careful to not denigrate the Guard. It's fine to go after me, which I expect the other side will do. I wouldn't denigrate service to the Guard, though, and the reason I wouldn't, is because there are a lot of really fine people who have served in the National Guard and who are serving in the National Guard today in Iraq.

RUSSERT: The Boston Globe and the Associated Press have gone through some of the records and said there's no evidence that you reported to duty in Alabama during the summer and fall of 1972.

THE PRESIDENT: Yeah, they're - they're just wrong. There may be no evidence, but I did report; otherwise, I wouldn't have been honorably discharged. In other words, you don't just say "I did something" without there being verification. Military doesn't work that way. I got an honorable discharge, and I did show up in Alabama.

RUSSERT: You did - were allowed to leave eight months before your term expired. Was there a reason?

THE PRESIDENT: Right. Well, I was going to Harvard Business School and worked it out with the military.

RUSSERT: When allegations were made about John McCain or Wesley Clark on their military records, they opened up their entire files. Would you agree to do that?

THE PRESIDENT: Yeah. Listen, these files - I mean, people have been looking for these files for a long period of time, trust me, and starting in the 1994 campaign for governor. And I can assure you in the year 2000 people were looking for those files as well. Probably you were. And - absolutely. I mean, I -

RUSSERT: But you would allow pay stubs, tax records, anything to show that you were serving during that period?

THE PRESIDENT: Yeah. If we still have them, but I - you know, the records are kept in Colorado, as I understand, and they scoured the records.

And I'm just telling you, I did my duty, and it's politics, you know, to kind of ascribe all kinds of motives to me. But I have been through it before. I'm used to it. What I don't like is when people say serving in the Guard is - is - may not be a true service.

RUSSERT: But you authorize the release of everything to settle this?

THE PRESIDENT: Yes, absolutely.

We did so in 2000, by the way.

RUSSERT: Were you favor of the war in Vietnam?

THE PRESIDENT: I supported my government. I did. And would have gone had my unit been called up, by the way.

RUSSERT: But you didn't volunteer or enlist to go.

THE PRESIDENT: No, I didn't. You're right. I served. I flew fighters and enjoyed it, and provided a service to our country. In those days we had what was called "air defense command," and it was a part of the air defense command system.

The thing about the Vietnam War that troubles me as I look back was it was a political war. We had politicians making military decisions, and it is lessons that any president must learn, and that is to the set the goal and the objective and allow the military to come up with the plans to achieve that objective. And those are essential lessons to be learned from the Vietnam War.

RUSSERT: Let me turn to the economy.

THE PRESIDENT: Yes.

RUSSERT: And this is one of my charts that I would like to show you.

THE PRESIDENT: I was hoping to see one of them.

RUSSERT: The Bush-Cheney first three years, the unemployment rate has gone up 33 percent, there has been a loss of 2.2 million jobs. We've gone from a $281 billion surplus to a $521 billion deficit. The debt has gone from $5.7 trillion, to $7 trillion - up 23 percent.

Based on that record, why should the American people rehire you as CEO?

THE PRESIDENT: Sure, because I have been the President during a time of tremendous stress on our economy and made the decisions necessary to lead - that would enhance recovery. Let me review the bidding here. The stock market started to decline in March of 2000. That was the first sign that things were troubled. The recession started upon my arrival. It could have been some say February, some say March, some speculate maybe earlier it started, but nevertheless it happened as we showed up here.

The attacks on our country affected our economy. Corporate scandals affected the confidence of people and therefore affected the economy. My decision on Iraq, this kind of march to war, affected the economy, but we have been through a lot. And what those numbers show is the fact we have been through a lot.

But what the people must understand is that instead of wondering what to do, I acted, and I acted by cutting the taxes on individuals and small businesses, primarily. And that, itself, has led to this recovery.

So, you show that the numbers kind of - I'm not suggesting the chart only shows the bad numbers, but how about the fact that we are now increasing jobs or the fact that unemployment is now down to 5.6 percent? There was a winter recession and unemployment went up, and now it's heading in the right direction.

The economic stimulus plan that I passed, or I asked the Congress to pass, and I worked with Congress to pass, is making a big difference.

RUSSERT: But when you proposed your first tax cut in 2001, you said this was going to generate 800,000 new jobs. Your tax cut of 2003, create a million new jobs. That has not happened.

THE PRESIDENT: Well, it's happening. It's happening. And there is good momentum when it comes to the creation of new jobs.

Again, we have been through a lot. This economy has been through a lot, which is why I'm so optimistic about the future because I know what we have been through.

And I look forward to debate on the economy because I think one of those things that's very important is that the entrepreneurial spirit of this country be strong and the small business sector be strong. And the policies I have laid out enhance entrepreneurship, they encourage small business creation, and I think this economy is coming around just right, frankly.

RUSSERT: The General Accounting Office, which are the nation's auditors -

THE PRESIDENT: Yeah.

RUSSERT: - have done a study of our finances.

THE PRESIDENT: Um-hmm.

RUSSERT: And this is what your legacy will be to the next generation. It says that our "current fiscal policy is unsustainable." They did a computer simulation that shows that balancing the budget in 2040 could require either cutting total federal spending in half or doubling federal taxes.

THE PRESIDENT: Um-hmm.

RUSSERT: How - why, as a fiscal conservative as you like to call yourself, would you allow a $500 billion deficit and this kind of deficit disaster?

THE PRESIDENT: Sure. The budget I just proposed to the Congress cuts the deficit in half in five years.

Now, I don't know what the assumptions are in the GAO report, but I do know that if Congress is wise with the people's money, we can cut the deficit in half. And at that point in time, as a percentage of GDP, the deficit will be relatively low.

I agree with the assessment that we've got some long-term financial issues we must look at, and that's one reason I asked Congress to deal with Medicare. I strongly felt that if we didn't have an element of competition, that if we weren't modern with the Medicare program, if we didn't incorporate what's called "health savings accounts" to encourage Americans to take more control over their healthcare decisions, we would have even a worse financial picture in the long run.

I believe Medicare is going to not only make the system work better for seniors but is going to help the fiscal situation of our long-term projection.

We got to deal with Social Security as well. As you know, these entitlement programs need to be dealt with.

We're dealing with some entitlement programs right now in the Congress. The highway bill. It's going to be an interesting test of fiscal discipline on both sides of the aisle. The Senate's is about 370, as I understand, $370 billion; the House is at less than that but over $300 billion. And as you know, the budget I propose is about $256 billion.

RUSSERT: But your base conservatives - and listen to Rush Limbaugh, the Heritage Foundation, Cato Institute, they're all saying you are the biggest spender in American history.

THE PRESIDENT: Well, they're wrong.

RUSSERT: Mr. President -

THE PRESIDENT: If you look at the appropriations bills that were passed under my watch, in the last year of President Clinton, discretionary spending was up 15 percent, and ours have steadily declined.

And the other thing that I think it's important for people who watch the expenditures side of the equation is to understand we're at war, Tim, and any time you commit your troops into harm's way, they must have the best equipment, the best training, and the best possible pay. That's where we owe it to their loved ones.

RUSSERT: That's a very important point. Every president since the Civil War who has gone to war has raised taxes, not cut them.

THE PRESIDENT: Yeah.

RUSSERT: Raised to pay for it. Why not say, I will not cut taxes any more until we have balanced the budget? If our situation is so precious and delicate because of the war, why do you keep cutting taxes and draining money from the treasury?

THE PRESIDENT: Well, because I believe that the best way to stimulate economic growth is to let people keep more of their own money. And I believe that if you raise taxes as the economy is beginning to recover from really tough times, you'll slow down economic growth. You'll make it harder.

See, I'm more worried about the fellow looking for the job. That's what I'm worried about. I want people working. I want people to find work. And so, when we stimulate the economy, it's more likely that person is going to find work. And the best way to stimulate the economy is not to raise taxes but to hold the low taxes down.

RUSSERT: How about no more tax cuts until the budget is balanced?

THE PRESIDENT: That's a hypothetical question which I can't answer to you because I don't know how strong the economy is going to be.

I mean, the President must keep all options on the table, but I do know that raising the child - lowering the child credit thereby raising taxes on working families does not make sense when the economy is recovering, and that's exactly what some of them are calling for up on Capitol Hill. They want to raise taxes of the families with children, they want to increase the marriage penalty. They want to get rid of those taxes on small businesses that are encouraging the stimulation of new job creation, and I'm not going to have any of it.

RUSSERT: We're going to take another quick break. We'll be right back with more of our conversation with the President in the Oval Office, right after this.

(Commercial)

RUSSERT: And we are back.

Mr. President, last time you were on this show you said that you wanted to change the tone in the nation.

THE PRESIDENT: Yeah.

RUSSERT: This is Time magazine: "Love Him or Hate Him: Why George Bush arouses such passion and what it means for the country."

THE PRESIDENT: Yes.

RUSSERT: Tom Daschle, the Democratic Leader in the Senate, said that you've changed the tone for the worse; that it's more acrimonious, more confrontations, that you are the most partisan political president he's ever worked with.

Our exit polls of primary voters, not just Democrats but Independents in South Carolina and New Hampshire, more than 70 percent of them said they are angry or dissatisfied with you, and they point to this whole idea of being a uniter as opposed to a divider.

Why do you think you are perceived as such a divider?

THE PRESIDENT: Gosh, I don't know, because I'm working hard to unite the country. As a matter of fact, it's the hardest part of being the president. I was successful as the governor of Texas for bringing people together for the common good, and I must tell you it's tough here in Washington, and frankly it's the biggest disappointment that I've had so far of coming to Washington.

I'm not blaming anybody. It's just the environment here is such that it is difficult to find common ground. I'll give you a classic case: the Medicare bill. The Medicare bill was a tough vote, but the Medicare bill is a bill that a lot of people could have signed on to and had it not been for kind of the sense of, well, "Bush might win, we might lose," you know, or "Bush might lose, we might win" kind of attitude.

And... but I will continue to work hard to unite the country. I don't speak ill of anybody in the process here. I think if you went back and looked at my comments, you will see I don't attack. I don't hold up people. I talk about what I believe in, and I lead, and maybe perhaps I believe so strongly in what we are doing around the world or doing here at home.

RUSSERT: But around the world, in Europe, favorable ratings - unfavorable ratings, 70 in Germany, 67 in France.

THE PRESIDENT: But you know, Tim, that -

RUSSERT: Why do people hold you in such low esteem?

THE PRESIDENT: Heck, I don't know, Ronald Reagan was unpopular in Europe when he was President, according to Jose Maria Aznar. And I said, "You know something?"

He said to me, he said, "You're nearly as unpopular as Ronald Reagan was." I said, "so, first of all, I'm keeping pretty good company."

I think that people - when you do hard things, when you ask hard things of people, it can create tensions. And I - heck, I don't know why people do it. I'll tell you, though, I'm not going to change, see? I'm not trying to accommodate - I won't change my philosophy or my point of view. I believe I owe it to the American people to say what I'm going to do and do it, and to speak as clearly as I can, try to articulate as best I can why I make decisions I make, but I'm not going to change because of polls. That's just not my nature.

RUSSERT: Two polls out this weekend show you -

THE PRESIDENT: See there, you're quoting polls.

RUSSERT: - you're trailing John Kerry in both U.S.A. Today and Newsweek polls by seven and five points.

THE PRESIDENT: Yeah.

RUSSERT: This is what John Kerry had to say last year. He said that his colleagues are appalled at the quote "President's lack of knowledge. They've managed him the same way they've managed Ronald Reagan. They send him out to the press for one event a day. They put him in a brown jacket and jeans and get him to move some hay or move a truck, and all of a sudden he's the Marlboro Man. I know this guy. He was two years behind me at Yale. I knew him, and he's still the same guy."

Did you know him at Yale?

THE PRESIDENT: No.

RUSSERT: How do you respond to that?

THE PRESIDENT: Politics. I mean, this is - you know, if you close your eyes and listen carefully to what you just said, it sounds like the year 2000 all over again.

RUSSERT: You were both in Skull and Bones, the secret society.

THE PRESIDENT: It's so secret we can't talk about it.

RUSSERT: What does that mean for America? The conspiracy theorists are going to go wild.

THE PRESIDENT: I'm sure they are. I don't know. I haven't seen Web pages yet. (Laughs)

RUSSERT: Number 322.

THE PRESIDENT: First of all, he's not the nominee, and - but look, I look forward -

RUSSERT: Are you prepared to lose?

THE PRESIDENT: No, I'm not going to lose.

RUSSERT: If you did, what would you do?

THE PRESIDENT: Well, I don't plan on losing. I've got a vision for what I want to do for the country. See, I know exactly where I want to lead. I want to lead us - I want to lead this world toward more peace and freedom. I want to lead this great country to work with others to change the world in positive ways, particularly as we fight the war on terror, and we got changing times here in America, too.

RUSSERT: Biggest issues in the upcoming campaign?

THE PRESIDENT: Who can properly use American power in a way to make the world a better place, and who understands that the true strength of this country is the hearts and souls of the American citizens, who understands times are changing and how best to have policy reflect those times.

And I look forward to a good campaign. I know exactly where I want to lead the country. I've shown the American people I can lead. I've shown the American people I can sit here in the Oval Office when times are tough and be steady and make good decisions, and I look forward to articulating what I want to do the next four years if I'm fortunate enough to be their president.

RUSSERT: Mr. President, we thank you for sharing your views. I hope we can come back and talk about issues during the course of the campaign.

THE PRESIDENT: Thank you, Tim.

RUSSERT: That's all for today. We'll be back next week. If it's Sunday, it's "Meet The Press."