    [Weekly Compilation of Presidential Documents Volume 40, Number 52 (Monday, December 27, 2004)]
    [Pages 2995-3007]
    [Online from the Government Publishing Office, www.gpo.gov]

    <R04>
    The President's News Conference

    December 20, 2004

        The President. Good morning, and happy holidays to you all. I
    thought I'd come and answer some of your questions. Before I do so, I've
    got a statement I'd like to make.
        We're nearing the end of a year where--of substantial progress at
    home and here--and abroad. In 2004, the United States grew in
    prosperity, enhanced our security, and served the cause of freedom and
    peace. Our duties continue in the new year. I'm optimistic about
    achieving results. America's economy is on solid footing, growth is
    strong,

    [[Page 2996]]

    and the Nation's entrepreneurs have generated more than 2 million jobs
    in this year alone.
        There's more we must do to keep this economy flexible, innovative,
    and competitive in the world. In a time of change, we must reform
    systems that were created to meet the needs of another era. Soon I will
    appoint a citizens panel to recommend ways we can transform the outdated
    Tax Code. I'll work with the new Congress to make health care more
    accessible and affordable, to reform the legal system, to raise
    standards of achievement in public schools, especially our high schools,
    and to fix the Social Security system for our children and our
    grandchildren.
        Early in the year, I will also submit a budget that fits the times.
    We will provide every tool and resource for our military. We'll protect
    the homeland, and we'll meet other priorities of the Government. My
    budget will maintain strict discipline in the spending of tax dollars
    and keep our commitment to cutting the deficit in half over 5 years.
        All of these goals require the energy and dedication of members of
    both political parties. Working in a spirit of bipartisanship, we will
    build the foundation of a stronger, more prosperous country. We'll meet
    our obligations to future generations as we do so.
        Our duties to future generations include a sustained effort to
    protect our country against new dangers. Last week, I signed legislation
    that continues the essential reorganization of our Government by
    improving the Nation's intelligence operations. Because we acted, our
    vast intelligence enterprise will be more unified, coordinated, and
    effective than ever before, and the American people will be more secure
    as a result.
        Our country is also safer because of the historic changes that have
    come around the world in places like Afghanistan. This year brought the
    first Presidential election in the 5,000-year history of that country.
    And the Government of President Hamid Karzai is a steadfast ally in the
    war on terror. President Karzai and the Afghan people can be certain of
    America's continued friendship and America's support as they build a
    secure and hopeful democracy.
        In Iraq, a people that endured decades of oppression are also
    preparing to choose their own leaders. Next month, Iraqis will go to the
    polls and express their will in free elections. Preparations are
    underway for an energetic campaign, and the participation is wide and
    varied. More than 80 parties and coalitions have been formed, and more
    than 7,000 candidates have registered for the elections. When Iraqis
    vote on January the 30th, they will elect 275 Members to a transitional
    National Assembly as well as local legislatures throughout the country.
        The new National Assembly will be responsible for drafting a
    constitution for a free Iraq. By next October, the constitution will be
    submitted to the people for ratification. If it is approved, then, by
    December, the voters of Iraq will elect a fully democratic
    constitutional government. My point is, the elections in January are
    just the beginning of a process, and it's important for the American
    people to understand that.
        As the Iraqi people take these important steps on the path to
    democracy, the enemies of freedom know exactly what is at stake. They
    know that a democratic Iraq will be a decisive blow to their ambitions,
    because free people will never choose to live in tyranny. And so the
    terrorists will attempt to delay the elections, to intimidate people in
    their country, to disrupt the democratic process in any way they can. No
    one can predict every turn in the months ahead, and I certainly don't
    expect the process to be trouble-free. Yet, I am confident of the
    result. I'm confident the terrorists will fail, the elections will go
    forward, and Iraq will be a democracy that reflects the values and
    traditions of its people.
        America and our coalition have a strategy in place to aid the rise
    of a stable democracy in Iraq. To help the Iraqi Government provide
    security during the election period, we will increase U.S. troop
    strength. Coalition forces will continue hunting the terrorists and the
    insurgents. We will continue training Iraqi security forces so the Iraqi
    people can eventually take responsibility for their own security.
        We have a vital interest in the success of a free Iraq. You see,
    free societies do not export terror. Free governments respect the

    [[Page 2997]]

    aspirations of their citizens and serve their hopes for a better life.
    Free nations are peaceful nations. And free nations in the heart of the
    Middle East will show what is possible to others who want to live in a
    free society.
        In Iraq and elsewhere, we've asked a great deal of the men and women
    of our Armed Forces. Especially during this holiday season, those on
    duty far from home will be in our thoughts and our prayers. Our people
    in uniform and our military families are making many sacrifices for our
    country. They have the gratitude of our whole country.
        Now I will be glad to answer some questions. Hunt [Terence Hunt,
    Associated Press].

    Russia-U.S. Relations

        Q. Thank you, Mr. President. A month ago in Chile, you asked
    Vladimir Putin to explain why he has taken actions widely seen as a move
    away from democracy. What do you think Mr. Putin's intentions are, and
    do you think that Russia's behavior has chilled relations with the
    United States?
        The President. As you know, Vladimir Putin and I have got a good
    personal relationship, starting with our meeting in Slovenia. I intend
    to keep it that way. It's important for Russia and the United States to
    have the kind of relationship where, if we disagree with decisions, we
    can do so in a friendly and positive way.
        When Vladimir made the decision, for example, on the--whether to
    elect Governors or appoint Governors, I issued a statement that said in
    a free society, in a society based upon Western values, we believe in
    the proper balance of power. I think he took that on and absorbed that
    in the spirit in which it was offered, the spirit of two people who've
    grown to appreciate each other and respect each other. I'll continue to
    work with him in a new term. Obviously, we have some disagreements. He
    probably has disagreements over some of the decisions I've made.
    Clearly, one such decision was in Iraq. But this is a vital and
    important relationship.
        And it's a relationship where it's complicated--it's complex, rather
    than complicated. It's complex because we have joint efforts when it
    comes to sharing intelligence to fight terrorism. We've got work to do
    to secure nuclear materials. I look forward to working with the Russians
    to continue to expand cooperation. I think one of the things we need to
    do is to give the Russians equal access to our sites, our nuclear
    storage sites, to see what works and what doesn't work, to build
    confidence between our two Governments.
        Obviously, there's a lot of trade that's taking place between Russia
    and the West and the United States. And that trade relationship is an
    important relationship. I told Vladimir that we would work in a new term
    for--to see if Russia could then be admitted to the WTO. I think that
    would be a positive step for relations between our two countries. And
    I'll continue to express my belief that balanced government, the sharing
    of power amongst government will lead to a--will lead to stability in
    Russia. And the relationship is an important relationship, and I would
    call the relationship a good relationship.

    Defense Secretary Rumsfeld

        Q. Thank you, Mr. President. Several Republican lawmakers recently
    have criticized Secretary Rumsfeld. What does he need to do to rebuild
    their trust?
        The President. Well, first of all, when I asked the Secretary to
    stay on as Secretary of Defense, I was very pleased when he said yes.
    And I asked him to stay on because I understand the nature of the job of
    the Secretary of Defense, and I believe he's doing a really fine job.
        The Secretary of Defense is a complex job. It's complex in times of
    peace, and it's complex even more so in times of war. And the Secretary
    has managed this Department during two major battles in the war on
    terror, Afghanistan and Iraq. And at the same time, he's working to
    transform our military so it functions better, it's lighter, it's ready
    to strike on a moment's notice--in other words, that the force structure
    meets the demands we face in the 21st century.
        Not only is he working to transform the nature of the forces, we're
    working to transform where our forces are based. As you know, we have
    recently worked with the South Korean Government, for example, to
    replace manpower with equipment, to keep

    [[Page 2998]]

    the Peninsula secure and the Far East secure but, at the same time,
    recognizing we have a different series of threats. And he's done a fine
    job, and I look forward to continuing to work with him.
        And I know the Secretary understands the Hill. He's been around in
    Washington a long period of time, and he will continue to reach out to
    Members of the Hill, explaining the decisions he's made. And I believe
    that in a new term, Members of the Senate and the House will recognize
    what a good job he's doing.
        Let's see here. Let's go to the TV personalities. [Laughter] Let's
    start with you, Cochran [John Cochran, ABC News]. David [David Gregory,
    NBC News], prepare yourself.

    Kerik Nomination/Vetting Process/Director of National Intelligence

        Q. Any lessons you have learned, sir, from the failed nomination of
    Bernard Kerik? As you look forward now to pick a new Director of the
    Homeland Security Department and also as you pick a Director of National
    Intelligence, any lessons learned in terms of vetting and particularly
    with the DNI? What sort of qualities are you going to be looking for in
    that man or that woman that you choose?
        The President. Well, first, let me say that I was disappointed that
    the nomination of Bernard Kerik didn't go forward. In retrospect, he
    made the right decision to pull his name down. He made the decision.
    There was a--when the process gets going, our counsel asks a lot of
    questions and a prospective nominee listens to the questions and answers
    them and takes a look at what we feel is necessary to be cleared before
    the FBI check and before the hearings take place on the Hill.
        And Bernard Kerik, after answering questions and thinking about the
    questions, decided to pull his name down. I think he would have done a
    fine job as the Secretary of Homeland Security, and I appreciate his
    service to our country.
        We've vetted a lot of people in this administration. We vetted
    people in the first. We're vetting people in the second term, and I've
    got great confidence in our vetting process. And so the lessons learned
    is, continue to vet and ask good questions and get these candidates, the
    prospective nominees, to understand what we expect a candidate will face
    during a background check--FBI background check as well as congressional
    hearings.
        Now, in terms of the NDI--DNI, I'm going to find someone that knows
    something about intelligence, and capable and honest and ready to do the
    job. And I will let you know at the appropriate time when I find such a
    person.
        Gregory.

    Training Iraqi Forces/Polls

        Q. Mr. President, thank you. A year ago we were in this room, almost
    to the day, and you were heralding the capture of Saddam Hussein and
    announcing the end of Ba'athists' tyranny in Iraq. A year later, the
    chairman of the Armed Services Committee in the Senate said, after
    returning from Iraq, that--talking about Iraqi troops--the raw material
    is lacking in the willpower and commitment after they receive military
    training. At the same time, here at home a higher percentage of
    Americans is less confident of a successful conclusion in Iraq, 48
    percent less confident to 41 percent. What's going wrong?
        The President. Well, first let me talk about the Iraqi troops. The
    ultimate success in Iraq is for the Iraqis to secure their country. I
    recognize that; the American people recognize that. That's the strategy.
    The strategy is to work to provide security for a political process to
    go forward. The strategy is to help rebuild Iraq. And the strategy is to
    train Iraqis so they can fight off the thugs and the killers and the
    terrorists who want to destroy the progress of a free society.
        Now, I would call the results mixed in terms of standing up Iraqi
    units who are willing to fight. There have been some cases where when
    the heat got on, they left the battlefield. That's unacceptable. Iraq
    will never secure itself if they have troops that when the heat gets on,
    they leave the battlefield. I fully understand that. On the other hand,
    there were some really fine units in Fallujah, for example, in Najaf,
    that did their duty. And so the--our military trainers, our military
    leaders have analyzed what worked

    [[Page 2999]]

    and what didn't work. And I met with General Abizaid and General Casey
    in the White House last week. And I think it was before the--I think it
    was Thursday morning, if I'm not mistaken--I was going to say before the
    interminable press conference--I mean press party. Anyway. [Laughter]
        Here's what--first of all, recruiting is strong. The place where the
    generals told me that we need to do better is to make sure that there is
    a command structure that connects the soldier to the strategy in a
    better way, I guess is the best way to describe it. In other words,
    they've got some generals in place and they've got foot soldiers in
    place, but the whole command structure necessary to have a viable
    military is not in place. And so they're going to spend a lot of time
    and effort on achieving that objective. And so the American people are
    taking a look at Iraq and wondering whether the Iraqis are eventually
    able--going to be able to fight off these bombers and killers. And our
    objective is to give them the tools and the training necessary to do so.
        Q. What about that percentage, though, 48 to 41? More Americans
    losing confidence----
        The President. You know, polls change, Dave. Polls go up. Polls go
    down. I can understand why people--they're looking on your TV screen and
    seeing indiscriminate bombing where thousands of innocent--or hundreds
    of innocent Iraqis are getting killed, and they're saying whether or not
    we're able to achieve the objective. What they don't see are the small
    businesses starting; 15 of the 18 provinces are relatively stable, where
    progress is being made; life is better now than it was under Saddam
    Hussein. And so there is--there are very hopeful signs.
        But no question about it, the bombers are having an effect. You
    know, these people are targeting innocent Iraqis. They're trying to
    shake the will of the Iraqi people and, frankly, trying to shake the
    will of the American people. And car bombs that destroy young children
    or car bombs that indiscriminately bomb in religious sites are effective
    propaganda tools. But we must meet the objective, which is to help the
    Iraqis defend themselves and at the same time have a political process
    to go forward. It's in our long-term interests that we succeed, and I'm
    confident we will.
        I saw an interesting comment today by somebody, I think in the
    Karbala area or Najaf area, who said, ``Look, what they're trying to
    do''--``they'' being the terrorists--``are trying to create sectarian
    violence.'' He said, ``They're not going to intimidate us from voting.
    People want to vote. People want to live in a free society.'' And our
    job in these tough times is to work and complete our strategy.
        Yes, John [John King, Cable News Network]. And then John [John
    Roberts, CBS News].
        Q. Mr. President, thank you.
        The President. I had to work my way through all the mass medias.

    Syria and Iran

        Q. You mentioned that meeting with General Abizaid and General
    Casey. One of their complaints now and a complaint we have heard dating
    back more than a year ago, even to when combat was underway in Iraq, is
    what some called meddling, interference from Syria and Iran, people
    coming across the border, people going back across the border, sometimes
    money. Now they say meddling in the political process. What specifically
    is the problem now, in your view? And there are some who watch this and
    see a series of complaints from the administration, but they say, ``Will
    there ever be consequences?''
        The President. Well, the--yes, I spent some time talking to our
    generals about whether or not there are former Saddam loyalists in
    Syria, for example, funneling money to the insurgents. And my attitude
    is, if there's any question that they're there, we ought to be working
    with the Syrian Government to prevent them from either sending money
    and/or support of any kind. We have sent messages to the Syrians in the
    past, and we will continue to do so. We have tools at our disposal, a
    variety of tools, ranging from diplomatic tools to economic pressure.
    Nothing is taken off the table. And when I said the other day that I
    expect these countries to honor the political process in Iraq without
    meddling, I meant it. And, hopefully, those Governments heard what I
    said.
        John.

    [[Page 3000]]

    Second Term Agenda/Social Security Reform

        Q. Thank you, Mr. President. You've made Social Security reform the
    top of your domestic agenda for a second term. You've been talking
    extensively about the benefits of private accounts. But by most
    estimations, private accounts may leave something for young workers at
    the end but wouldn't do much to solve the overall financial problem with
    Social Security.
        And I'm just wondering, as you're promoting these private accounts,
    why aren't you talking about some of the tough measures that may have to
    be taken to preserve the solvency of Social Security, such as increasing
    the retirement age, cutting benefits, or means testing for Social
    Security?
        The President. Yes, I appreciate that question. First of all, let me
    put the Social Security issue in proper perspective. It is a very
    important issue, but it's not the only issue, very important issue we'll
    be dealing with. I expect the Congress to bring forth meaningful tort
    reform. I want the legal system reformed in such a way that we are
    competitive in the world. I'll be talking about the budget, of course.
    There is a lot of concern in the financial markets about our deficits,
    short-term and long-term deficits. The long-term deficit, of course, is
    caused by some of the entitlement programs, the unfunded liabilities
    inherent in our entitlement programs. I will continue to push on an
    education agenda. There's no doubt in my mind that the No Child Left
    Behind Act is meaningful, real, reform that is having real results. And
    I look forward to strengthening No Child Left Behind. Immigration reform
    is a very important agenda item as we move forward.
        But Social Security as well is a big item. And I campaigned on it,
    as you're painfully aware, since you had to suffer through many of my
    speeches. I didn't duck the issue like others have done have in the
    past. I said this is a vital issue, and we need to work together to
    solve it. Now, the temptation is going to be, by well-meaning people
    such as yourself, John, and others here, as we run up to the issue, to
    get me to negotiate with myself in public, to say, you know, ``What's
    this mean, Mr. President? What's that mean?'' I'm not going to do that.
        I don't get to write the law. I will propose a solution at the
    appropriate time, but the law will be written in the Halls of Congress.
    And I will negotiate with them, with the Members of Congress, and they
    will want me to start playing my hand: ``Will you accept this? Will you
    not accept that? Why don't you do this hard thing? Why don't you do
    that?'' I fully recognize this is going to be a decision that requires
    difficult choices, John. Inherent in your question is, do I recognize
    that? You bet I do. Otherwise, it would have been done.
        And so I am--I just want to try to condition you. I'm not doing a
    very good job, because the other day in the Oval when the press pool
    came in, I was asked about this, a series of question on--a question on
    Social Security with these different aspects to it. And I said, ``I'm
    not going to negotiate with myself,'' and I will negotiate at the
    appropriate time with the law writers. And so thank you for trying.
        The principles I laid out in the course of the campaign and the
    principles we laid out at the recent economic summit are still the
    principles I believe in. And that is, nothing will change for those near
    our Social Security; payroll--I believe you were the one who asked me
    about the payroll tax, if I'm not mistaken--will not go up.
        And I know there's a big definition about what that means. Well,
    again, I will repeat, don't bother to ask me. Or you can ask me. I
    shouldn't--I can't tell you what to ask. It's not the holiday spirit.
    [Laughter] It is all part of trying to get me to set the parameters
    apart from the Congress, which is not a good way to get substantive
    reform done.
        As to personal accounts, it is, in my judgment, essential to make
    the system viable in the out years to allow younger workers to earn an
    interest rate more significant than that which is being earned with
    their own money now inside the Social Security trust. But the first step
    in this process is for Members of Congress to realize we have a problem.
        And so for a while, I think it's important for me to continue to
    work with members

    [[Page 3001]]

    of both parties to explain the problem. Because if people don't think
    there's a problem, we can talk about this issue until we're blue in the
    face, and nothing will get done. And there is a problem. There's a
    problem because now it requires three workers per retiree to keep Social
    Security promises. In 2040, it will require two workers per employee to
    meet the promises. And when the system was set up and designed, I think
    it was, like, 15 or more workers per employee. That is a problem. The
    system goes into the red. In other words, there's more money going out
    than coming in, in 2018. There is an unfunded liability of $11 trillion.
    And I understand how this works. Many times, legislative bodies will not
    react unless the crisis is apparent, crisis is upon them. I believe that
    crisis is.
        And so for a period of time, we're going to have to explain to
    Members of Congress, the crisis is here. It's a lot less painful to act
    now than if we wait.
        Q. Can I ask a followup?
        The President. No. [Laughter] Otherwise, it will make everybody else
    jealous, and I don't want that to happen.
        Angle [Jim Angle, FOX News].

    Personal Retirement Accounts

        Q. Thank you, sir. Mr. President, on that point, there is already a
    lot of opposition to the idea of personal accounts, some of it fairly
    entrenched among the Democrats. I wonder what your strategy is to try to
    convince them to your view? And specifically, they say that personal
    accounts would destroy Social Security. You argue that it would help
    save the system. Can you explain how?
        The President. I will try to explain how without negotiating with
    myself. It's a very tricky way to get me to play my cards. I understand
    that. I think what you--people ought to do is to go look at the Moynihan
    Commission report. The other day, in the discussions at the economic
    summit, we discussed the role of a personal account, in other words,
    what--how a personal account would work. And that is, the people could
    set aside a negotiated amount of their own money in an account that
    would be managed by that person, but under serious guidelines. As I
    said, you can't use the money to go to the lottery or take it to the
    track. There would be--it's like the--some of the guidelines that some
    of the Thrift Savings Plans right here in the Federal Government.
        And the younger worker would gain a rate of return which would be
    more substantial than the rate of return of the money now being earned
    in the Social Security trust. And over time, that rate of return would
    enable that person to be--have an account that would make up for the
    deficiencies in the current system. In other words, the current system
    can't sustain that which has been promised to the workers. That's what's
    important for people to understand, and the higher rate of return on the
    negotiated amount of money set aside would enable that worker to more
    likely get that which was promised.
        Now, the benefits, as far as I'm concerned, of the personal savings
    account, is, one, it encourages an ownership society. One of the
    philosophies of this Government is, if you own something, it is--it
    makes the country a better--if more people own something, the country is
    better off. You have a stake in the future of the country if you own
    something. Secondly, it's capital available for--when people save, it
    provides capital for entrepreneurial growth and entrepreneurial
    expansion, which is positive. In other words, it enhances savings. And
    thirdly, it means that people can take their own assets, their own
    retirement assets, and pass them on, if they so choose, to their family
    members, for example. That's positive. That's a step.
        The Social Security system was designed in a--obviously, in an era
    that is long gone, and it has worked in many ways. It's now in a
    precarious position, and the question is whether or not our society has
    got the will necessary to adjust from a defined benefit plan to a
    defined contribution plan. And I believe the will will be there, but I'm
    under no illusions. It's going to take hard work. It's going to take
    hard work to convince a lot of people, some of whom would rather not
    deal with the issue--why deal with the issue unless there is a crisis?--
    and some of whom have got preconceived notions about the benefits of
    what may be possible.
        Okay, let's get away from the media. Yes, Carl [Carl Cannon,
    National Journal], thank

    [[Page 3002]]

    you. I accused Carl of trying to look like Johnny Damon. [Laughter]

    Timetable for Iraq/Training Iraqi Forces

        Q. Mr. President, it's--140,000 Americans are spending this
    Christmas in Iraq, as you know, some of them their second Christmas
    there. Now, you outlined your vision for Iraq, both in your statement
    and in response to David Gregory. My question is, how long do you think
    it will take that vision to be realized, and how long will those troops
    be there?
        The President. No, it's a very legitimate question, Carl. And I get
    asked that by family members I meet with, and people say, ``How long do
    you think it will take?'' And my answer is, you know, we would like to
    achieve our objective as quickly as possible. It is our commander--
    again--I can--the best people that reflect the answer to that question
    are people like Abizaid and Casey, who are right there on the ground.
    And they are optimistic and positive about the gains we're making.
        Again, I repeat, we're under no illusions that this Iraqi force is
    not ready to fight. They're--in toto, there are units that are, and that
    they believe they'll have a command structure stood up pretty quickly,
    that the training is intense, that the recruitment is good, the
    equipping of troops is taking place. So they're optimistic that as soon
    as possible it can be achieved. But it's--I'm also wise enough not to
    give you a specific moment in time because, sure enough, if we don't
    achieve it, I'll spend the next press conference I have with you
    answering why we didn't achieve this specific moment.
        Sanger [David Sanger, New York Times].

    North Korea/Iran

        Q. Thank you, Mr. President. You spent a good deal of time before
    the Iraq war, some in this room, explaining to us why the combination of
    Saddam Hussein as a dictator and the weapons that you thought at the
    time he had assembled made a case for regime change. In the case of
    North Korea and Iran, you have not declared yourself on the question of
    regime change, though North Korea, your intelligence agencies believe,
    may have added six or seven nuclear weapons in the past 2 years. And
    Iran seems to have a covert program, or at least your Government
    believes it does. Where do you stand on regime change? And how would it
    be accomplished?
        The President. I'll tell you where I stand, David. I stand on the--
    continuing the six-party talks with North Korea to convince Kim Chong-il
    to give up his weapons systems. As you might remember, our countries
    tried a strategy of bilateral relationships in hopes that we can
    convince Kim Chong-il. It didn't work. As a matter of fact, when we
    thought we had in good faith agreed to an agreement--I mean, agreed to a
    plan that would work, he, himself, was enriching uranium, or saw to it
    that the uranium was enriched. In other words, he broke the agreement.
        I think it's an important lesson for this administration to learn
    and that the best way to convince him to disarm is to get others to
    weigh in as well--the Iranian situation as well. We're relying upon
    others, because we've sanctioned ourselves out of influence with Iran,
    to send a message that we expect them to--in other words, we don't have
    much leverage with the Iranians right now, and we expect them to listen
    to those voices, and we're a part of the universal acclaim.
        I believe that--and so, therefore, we're dealing--this is how we're
    dealing with the issue. And it's much different between the situation in
    Iraq and Iran because of this. Diplomacy had failed for 13 years in
    Iraq. As you might remember, and I'm sure you do, all the U.N.
    resolutions that were passed out of the United Nations, totally ignored
    by Saddam Hussein.
        And so diplomacy must be the first choice and always the first
    choice of an administration trying to solve an issue of, in this case,
    nuclear armament. And we'll continue to press on diplomacy.
        Now, in terms of my vision for the future of the world, I believe
    everybody ought to be free. I believe the world is more peaceful as
    liberty takes hold. Free societies don't fight each other. And so we'll
    work to continue to send a message to reformers around the world that
    America stands strong in our belief that freedom is universal, and that
    we hope at some point in time, everybody is free.
        Yes.

    [[Page 3003]]

    Federal Spending/Budget Process

        Q. Thank you, Mr. President. You talked earlier about the importance
    of spending discipline in the Federal budget, but you went your entire
    first term without vetoing a single spending bill, even though you had a
    lot of tough talk on that issue in your first term. And I'm wondering,
    this time around, what are you going to do to convince Congress you
    really are serious about cutting Federal spending? Will you veto
    spending bills this time?
        The President. Here's what happened. I submitted a budget, and
    Congress hit our number, which is a tribute to Senator Hastert and--I
    mean, Senator Frist and Speaker Hastert's leadership. In other words, we
    worked together. We came up with a budget, like we're doing now. We went
    through the process of asking our agencies, ``Can you live with this,''
    and, ``If you don't like it, counter-propose.''
        And then we came up with a budget that we thought was necessary, and
    we took it to the leadership, and they accepted the budget. And they
    passed bills that met our budget targets. And so how could you veto a
    series of appropriations bills if the Congress has done what you've
    asked them to do?
        Now, I think the President ought to have a line-item veto, because
    within the appropriations bills there may be some differences of opinion
    on how the money is being spent. But overall, they have done a superb
    job of working with the White House to meet the budget numbers we
    submitted, and so the appropriations bill I just signed was one that
    conformed with the budget agreement we had with the United States
    Congress. And I really do appreciate the leadership not only of Speaker
    Hastert and Senator Frist but also the budget committee chairman. I
    talked to Senator Gregg this morning, as a matter of fact, who's
    running--he'll be heading the budget committee in the United States
    Senate.
        And we're working very closely with Members of Congress as we
    develop the budget. And it's going to be a tough budget, no question
    about it, and it's a budget that I think will send the right signal to
    the financial markets and to those concerned about our short-term
    deficits. As well, we've got to deal with the long-term deficit issues.
    That's the issue that John Roberts talked about, which is the unfunded
    liabilities when it comes to some of the entitlement programs.
        Ed [Ed Chen, Los Angeles Times].

    Social Security Reform

        Q. Good morning, Mr. President. I'd like to ask you, on Social
    Security, you said that you don't like to come to the table with--having
    negotiated with yourself. Yet, you have ruled out tax cuts and no cuts
    in benefits for the retired and the near-retired. I wonder how you
    square that statement. And also, what do you--in your mind, what is
    near-retired?
        The President. Yes, well, that's going to fall in the negotiating
    with myself category. But look, it was very important for me in the
    course of the campaign, and it's going to very important for all of us
    who feel like we have a problem that needs to be fixed, to assure
    Americans who are on Social Security that nothing will change.
        Part of the problem, politically, with this issue in the past, Ed,
    as you know, is the minute you bring up Social Security reform, people
    go running around the country saying, ``Really what he says is he's
    going to take away your check,'' or ``That which you have become
    dependent upon will no longer be available for you to live on.'' And so,
    therefore, part of setting the stage or laying the groundwork for there
    to be a successful reform effort is assuring our seniors that they just
    don't have to worry about anything. When they hear the debate that is
    taking place on the floor of the Congress, they just need to know that
    the check they're getting won't change, that promises will be met, that,
    you know, if there is to be an increase in their check, they'll get
    their check. In other words, the formula that has enabled them to the--
    to a certain extent--the formula they're relying on won't change, let me
    put it that way. I was trying to be really brilliant.
        Now, what was the other part of your question?
        Q. If I could just follow up. Why----
        The President. Is this a followup or part of the question?
        Q. You asked, though. [Laughter]

    [[Page 3004]]

        The President. Okay, yes, you're right. [Laughter]

    Medicare Reform

        Q. Why did you choose to take on Social Security and not Medicare,
    which some people believe is a worse problem?
        The President. Well, I appreciate that, Ed, but we did take on
    Medicare. And it was the Medicare reform bill that really began to
    change Medicare as we knew it. In other words, it introduced market
    forces for the first time. It provided a prescription drug coverage for
    our seniors, which I believe will be cost effective. I recognize some of
    the actuaries haven't come to that conclusion yet. But the logic is
    irrefutable, it seems like to me, that if the Government is willing to
    pay $100,000 for heart surgery but not a dime for the prescription drug
    that would prevent the heart surgery from happening in the first place,
    aren't we saving money when we provide the money necessary to prevent
    the surgery from being needed in the first place? I think we are. That's
    one of the differences of opinion that I had with the actuaries.
        I readily concede I'm out of my lane. I'm not pretending to be an
    actuary. But I know that we made progress in modernizing the Medicare
    system. And there's more work to be done, no question about it. But as
    you know, it's a 3-year phase-in on Medicare--or 2-year phase-in from
    now. And in 2006, the prescription drug coverage will become available
    for our seniors. And I look forward to working with Members of Congress
    to make sure the Medicare system is solvent in the long run.
        Let's have somebody new. Mike [Mike Allen, Washington Post], you
    want to--no, you're not new. [Laughter] That is a cheap shot. Go ahead--
    that is generous.

    Immigration Reform

        Q. Thank you. [Laughter] Yes, Mr. President----
        The President. Yes, Mike, welcome.
        Q. ----since early in your first term you've talked about
    immigration reform, but yet, people in your own party on the Hill seem
    opposed to this idea. And you've gotten opposition even on the other
    side. Do you plan to expend some of your political capital this time to
    see this through?
        The President. Yes, I appreciate that--well, first of all, welcome.
    I'd like to welcome all the new faces--some prettier than others, I
    might add. [Laughter]
        Yes, I intend to work with Members of Congress to get something
    done. I think this is an issue that will make it easier for us to
    enforce our borders. And I believe it's an issue that is--that will show
    the--if when we get it right, the compassionate heart of American
    people. And no question, it's a tough issue, just like some of the other
    issues we're taking on. But my job is to confront tough issues and to
    ask Congress to work together to confront tough issues.
        Now let me talk about the immigration issue. First, we want our
    Border Patrol agents chasing crooks and thieves and drugrunners and
    terrorists, not good-hearted people who are coming here to work. And
    therefore, it makes sense to allow the good-hearted people who are
    coming here to do jobs that Americans won't do a legal way to do so. And
    providing that legal avenue, it takes the pressure off the border.
        Now, we need to make sure the border is modern, and we need to
    upgrade our Border Patrol. But if we expect the Border Patrol to be able
    to enforce a long border, particularly in the south--and the north, for
    that matter--we ought to have a system that recognizes people are coming
    here to do jobs that Americans will not do. And there ought to be a
    legal way for them to do so. To me, that is--and not only that, but once
    the person is here, if he or she feels like he or she needs to go back
    to see her family, to the country of origin, they should be able to do
    so within a prescribed--in other words, and the card, the permit would
    last for a prescribed period of time. It's a compassionate way to treat
    people who come to our country. It recognizes the reality of the world
    in which we live. There are some people--there are some jobs in America
    that Americans won't do and others are willing to do.
        Now, one of the important aspects of my vision is that this is not
    automatic citizenship. The American people must understand that, that if
    somebody who is here working wants to be a citizen, they can get in line
    like those

    [[Page 3005]]

    who have been here legally and have been working to become a citizen in
    a legal manner.
        And this is a very important issue, and it's a--and I look forward
    to working with Members of Congress. I fully understand the politics of
    immigration reform. I was the Governor of Texas, right there on the
    frontlines of border politics. I know what it means to have mothers and
    fathers come to my State and across the border of my State to work.
    Family values do not stop at the Rio Grande River, is what I used to
    tell the people of my State. People are coming to put food on the table;
    they're doing jobs Americans will not do.
        And to me, it makes sense for us to recognize that reality and to
    help those who are needing to enforce our borders; legalize the process
    of people doing jobs Americans won't do; take the pressure off of
    employers so they're not having to rely upon false IDs; cut out the
    ``coyotes'' who are the smugglers of these people, putting them in the
    back of tractor trailers in the middle of August in Texas, allowing
    people to suffocate in the back of the trucks; stop the process of
    people feeling like they've got to walk miles across desert in Arizona
    and Texas in order just to feed their family, and they find them dead
    out there. I mean, this is a system that can be much better.
        And I'm passionate on it because the nature of this country is one
    that is good-hearted and compassionate. Our people are compassionate.
    The system we have today is not a compassionate system. It's not
    working. And as a result, the country is less secure than it could be
    with a rational system.
        Yes, sir. Let us take it overseas, across the pond.

    Usama bin Laden/Guantanamo Detainees

        Q. Thank you very much, Mr. President. I wonder whether I could ask
    you two central questions about the war on terrorism. The first one is,
    do you have a sense of where Usama bin Laden is and why the trail on him
    seems to have gone cold? And secondly, how concerned are you by the
    reports of torture, to use your word, the interminable delays to
    justice, for the detainees held in Guantanamo and how much that damages
    America's reputation as a nation which stands for liberty and justice
    internationally?
        The President. Right, thank you. If I had to guess, I would guess
    that Usama bin Laden is in a remote region on the Afghan-Pakistan
    border. But I don't have to guess at the damage we have done to his
    organization. Many of his senior operators have been killed or detained.
    Pakistan Government has been aggressive in pursuit of Al Qaida targets
    in Waziristan.
        And I appreciate the work of President Musharraf. He came the other
    day, on a Saturday morning, to the White House, and it was an
    opportunity to thank him once again for some of the bold steps he's
    taken. And Al Qaida is dangerous, no question about it. But we've got a
    good strategy, and it's a strategy that requires cooperation with other
    nations, and the cooperation has been great when it comes to sharing
    intelligence and cutting off finances and arresting people or killing
    people. We'll stay on the hunt.
        In terms of the second part of your--oh, the damage. Look, we are a
    nation of laws and to the extent that people say, ``Well, America is no
    longer a nation of laws,'' that does hurt our reputation. But I think
    it's an unfair criticism. As you might remember, our courts have made a
    ruling. They looked at the jurisdiction, the right of people in
    Guantanamo to have habeas review, and so we're now complying with the
    court's decisions. We want to fully vet the court decision, because I
    believe I have the right to set up military tribunals. And so the law is
    working to determine what Presidential powers are available and what's
    not available. We're reviewing the status of the people in Guantanamo on
    a regular basis. I think 200 and some-odd have been released. But you've
    got to understand the dilemma we're in. These are people that got
    scooped up off a battlefield, attempting to kill U.S. troops. I want to
    make sure, before they're released, that they don't come back to kill
    again.
        I think it's important to let the world know that we fully
    understand our obligations in a society that honors rule of law to do
    that. But I also have an obligation to protect the American people, to
    make sure we understand the nature of the people that we hold, whether
    or not there's possible intelligence

    [[Page 3006]]

    we can gather from them that we could then use to protect us. So we'll
    continue to work the issue hard.
        Let's see here, yes, Hutch [Ron Hutcheson, Knight Ridder]. Go ahead
    and yell it out, Hutch.

    Defense Secretary Rumsfeld

        Q. Going for another new face, huh?
        The President. Yes. [Laughter]
        Q. I'd like to go back to Secretary Rumsfeld----
        The President. It's not a pretty face. [Laughter]
        Q. Thank you. [Laughter] You talked about the big picture elements
    of the Secretary's job, but did you find it offensive that he didn't
    take the time to personally sign condolence letters to the families of
    troops killed in Iraq? And if so, why is that an offense that you're
    willing to overlook?
        The President. Listen, I know how--I know Secretary Rumsfeld's
    heart. I know how much he cares for the troops. He and his wife go out
    to Walter Reed and Bethesda all the time to provide comfort and solace.
    I have seen the anguish in his--or heard the anguish in his voice and
    seen his eyes when we talk about the danger in Iraq and the fact that
    youngsters are over there in harm's way. And he is--he's a good, decent
    man. He's a caring fellow. Sometimes, perhaps, his demeanor is rough and
    gruff, but beneath that rough and gruff, no-nonsense demeanor is a good
    human being who cares deeply about the military and deeply about the
    grief that war causes.
        Deans [Bob Deans, Cox Newspapers].

    Situation in the Middle East

        Q. Mr. President, I want to kick forward to the elections in Gaza in
    a few weeks if I could, please. As you know, Presidents back to Carter
    have searched for a solution to the Palestinian-Israeli conflict. Your
    dad worked hard for it. Your predecessor said once it was like going to
    the dentist without getting your gums numbed. I'm wondering what great--
    --
        The President. Guy had a way with words. [Laughter]
        Q. I'm wondering, sir, what lesson you draw, though, from their
    efforts, how you think the war in Iraq may, at this point, have improved
    prospects for a Mideast peace, and whether you think you might sit in
    that diplomatic dental chair yourself this year?
        The President. I've been in the diplomatic dental chair for 4 years.
    This is an issue we talk about a lot, but it became apparent to me that
    peace would never happen so long as the interlocutor in the peace
    process was not really dedicated to peace or dedicated to a state.
        I was at--look, I gave the speech June 24, 2002, in the Rose Garden
    that laid out the vision about how to achieve--at least from my point of
    view, how to achieve a peaceful solution and something that I hope
    happens. But I'm realistic about how to achieve peace, and it starts
    with my understanding that there will never be peace until a true
    democratic state emerges in the Palestinian territory. And I'm hopeful
    right now because the Palestinians will begin to have elections, have--
    will have elections, which is the beginning of the process toward the
    development of a state. It is not the sign that democracy has arrived.
    It is the beginning of a process.
        And we look forward to working with Israel to uphold her obligations
    to enable a Palestinian state to emerge. But we've got a good chance to
    get it done. And I just want the people--and I know the world is
    wondering whether or not this is just empty rhetoric or does--do I
    really believe that now is the time to move the process forward. And the
    answer is, now is the time to move the process forward. But we cannot
    shortcut the process by saying, you know, ``Well, the Palestinians can't
    self-govern. They're not suitable for a democracy.''
        I subscribe to this theory, that the only way to achieve peace is
    for there to be democracies living side by side. Democracies don't fight
    each other. And the last system didn't work, which was the hope that a
    Palestinian Authority, run by a singular head who on some days would
    say, ``We're for peace,'' and some days would say, ``Now is the time to
    attack,'' hope that everything would be fine. It just didn't work.
        So I look forward to working with the world, the new Secretary of
    State, to work with the Palestinians to develop the structures necessary
    for a democracy to emerge.

    [[Page 3007]]

    And I appreciate the fact that Prime Minister Tony Blair is willing to
    help that process by holding a conference with Palestinians that will
    help develop the state. And if the free world focuses on helping the
    Palestinians develop a state and there is leadership willing to accept
    the help, it's possible to achieve peace. And there are responsibilities
    for all parties. The Palestinians have responsibilities. The Israelis
    have responsibilities. The Americans have responsibilities. The EU has
    responsibilities. But we all have got to keep the big vision in mind in
    order to achieve the objective.
        Listen, thank you all very much. I wish everybody--truly wish
    everybody a happy holidays. For those of you coming to Crawford, I look
    forward to not seeing you down there. [Laughter]
        Thank you all.

    Crawford Pirates

        Q. Are you going to the Rose Bowl?
        The President. No, I won't be going to the Rose Bowl. I'll be
    watching the Rose Bowl.
        And by the way, in case you're not following high school football in
    Texas--atta boy, Jackson [David Jackson, Dallas Morning News]--the
    Crawford Pirates are the State 2A, Division II champs. And we look
    forward--don't we--to wave the championship banner above the Crawford
    High School.
        All right, happy holidays.

    Note: The President's news conference began at 10:32 a.m. in Room 450 of
    the Dwight D. Eisenhower Executive Office Building. In his remarks, he
    referred to President Hamid Karzai of Afghanistan; President Vladimir
    Putin of Russia; former President Saddam Hussein of Iraq; Gen. John P.
    Abizaid, USA, combatant commander, U.S. Central Command; Gen. George W.
    Casey, USA, commanding general, Multi-National Force--Iraq; professional
    baseball player Johnny Damon; Chairman Kim Chong-il of North Korea;
    Usama bin Laden, leader of the Al Qaida terrorist organization;
    President Pervez Musharraf of Pakistan; Joyce Rumsfeld, wife of
    Secretary of Defense Donald H. Rumsfeld; and Prime Minister Tony Blair
    of the United Kingdom. He also referred to the President's Commission to
    Strengthen Social Security (Moynihan Commission). The Office of the
    Press Secretary also released a Spanish language transcript of this news
    conference.