BUSH: Thank you.

We have been through a lot together. As I look to the room, I see Jake, Mike, Herman, Ann Compton. Just seemed like yesterday that -- that I was on the campaign trail and you were analyzing my speeches and my policies.

And I see a lot of faces that travel with me around the world and -- to places like Afghanistan and Iraq and Africa. I see some new faces, which goes to show there's some turnover in this business.

Through it all, it's been -- I have respected you. Sometimes I didn't like the stories that you wrote or reported on. Sometimes you misunderestimated me.

But always the relationship, I have felt, has been professional, and I appreciate it.

I appreciate -- I do appreciate working with you.

My friends say, "What is it like to deal with the press corps?" I say, "These are just people that are trying to do the best they possibly can."

And -- and so, here at the last press conference, I'm -- I'm interested in answering some of your questions, but mostly I'm interested in saying thank you for the job.

QUESTION: Thank you for those comments, Mr. President.

Here's a question: I'm wondering if you plan to ask Congress for the remaining $350 billion in bailout money? And, in terms of the timing, if you do that before you leave office, sir, are you motivated in part to make -- make life a little bit easier for President-elect Obama?

BUSH: I have talked to the president-elect about this subject. And I told him that if he felt that he needed the $350 billion, I would be willing to ask for it.

In other words, if he felt like it needed to happen on my watch.

The best course of action, of course, is to convince enough members of the Senate to vote positively for the -- for the request. And -- and, you know, that's all I can share with you, because that's all I know.

QUESTION: So you haven't made a request yet?

BUSH: Well, he hasn't asked me to make a request yet. And I don't intend to make a request unless he specifically asks me to make it.

He is -- you know, I've had -- my third conversation with him, and I -- I generally mean what I say. I wish him all the very best. I've found him to be very smart and engaging person.

And that lunch the other day was interesting: to have two guys who are nearly 85, two 62-year-olders and a 47-year-old. It's a kind of -- the classic generational statement.

BUSH: And one common area that at least the four of us -- we all had different circumstances and experiences, but one thing is we've all experienced what it means to withstand the responsibility of the presidency. And President-elect Obama is fixing to do that.

And he'll get sworn in and he'll have the lunch and all the -- you know, all the deal up there on Capitol Hill, and then he'll come back and go through the inauguration. And then he'll walk in the Oval Office and there'll be a moment when the responsibilities of the president land squarely on his shoulders.

QUESTION: Do you believe that the Gaza conflict will have ended by the time you leave office?

Do you approve of the way that Israel has conducted it?

And why were you unable to achieve the peace deal that you had sought?

BUSH: Remind me of the three points, because I'm getting -- I'm getting a little older.

(LAUGHTER)

QUESTION: Will it end by the time you leave office?

BUSH: I hope so.

I'm for a sustainable cease-fire. And a definition of a sustainable cease-fire is that Hamas stops firing rockets into Israel. And there will not be a sustainable cease-fire if they continue firing rockets.

I happen to believe the choice is Hamas' to make.

And we believe that the best way to ensure that there is a sustainable cease-fire is to work with Egypt to stop the smuggling of arms into the Gaza that enables Hamas to continue to fire rockets.

And -- so countries that supply weapons to Hamas have got to stop. And the international community needs to continue to pressure them to stop providing weapons.

Hamas, obviously, if they're interested in a sustainable cease-fire, needs to stop arming. And then, of course, you know, countries contingent to the Gaza need to work to stop the smuggling.

And it's a difficult, difficult task. I mean, there's tunnels and, you know, great opportunities for people who want to continue to try to disrupt democracy to provide the weapons to do so.

Second part of your question please, ma'am?

QUESTION: Do you approve of Israeli conduct in this?

BUSH: I think Israel has a right to defend herself.

Obviously, in any of these kinds of situations I would hope that she would continue to be mindful of innocent folks, and that -- that they help, you know, expedite the delivery of humanitarian aid.

QUESTION: Third, why haven't we achieved peace?

BUSH: That's a good question. It's been a long time since they've had peace in the Middle East.

Step one is to have a vision for what peace would look like. And in 2002 on the steps of the Rose Garden, I gave a speech about a two-state solution -- two states, two democracies living side by side in peace -- and we have worked hard to advance that idea.

First thing is to convince all parties that the two states were necessary for peace. And one thing that has happened is that most people in the Middle East now accept the two-state solution as the best way for peace. Most Palestinians want their own state and most Israelis understand there needs to be a democracy on their boarder in order for there to be long-lasting peace.

The challenge, of course, has been to lay out the conditions so that a peaceful state can emerge. In other words, helping the Palestinians in the West Bank develop security forces, which we have worked hard to do over the past years.

And those security forces are now becoming more efficient, and Prime Minister Fayyad is using them effectively.

The challenge is to develop -- help the Palestinians develop a democracy -- I mean -- and a vibrant economy in their -- that will help lead to democracy.

And the challenge, of course, is always complicated by the fact that people are willing to murder to stop the advance of freedom. And so, the -- Hamas or, for that matter, Al Qaida or other extremist groups, are willing to use violence to prevent free states from emerging. And that's the big challenge.

And so, the answer is, will this ever happen? I think it will. And I know we've advanced the process.

Yes, Suzann (?)? I finally got your name right after, how many years?

QUESTION: Yes.

BUSH: Six years?

QUESTION: Six years, eight years.

BUSH: Eight years.

(LAUGHTER)

QUESTION: Your 2002 State of the Union address, you identified U.S. threats as an axis of evil, Iran, Iraq and North Korea.

Iraq is relatively calm. North Korea no longer on the terrorist threat list. How would you define if, in fact, there is still an axis of evil? And what is the greatest and most urgent threat when it comes to security that Barack Obama has to deal with?

BUSH: The most urgent threat that he'll have to deal with and other presidents after him will have to deal with is an attack on our homeland.

You know, I wish I could report that's not the case, but there's still an enemy out there that would like to inflict damage on America -- Americans. And that'll be the major threat.

North Korea's still a problem. There is a debate in the intel community about how big a problem they are.

But one of my concerns is that there might be a -- a highly enriched uranium program. And therefore it is really important that out of the six-party talks comes a -- a strong verification regime.

In other words, in order to advance our relations with North Korea, the North Korean government must honor the commitments it made to allow for strong verification measures to be in place, to ensure that they don't develop a -- a highly enriched uranium program, for example.

So they're still dangerous and Iran is still dangerous.

QUESTION: You said in an interview earlier this weekend one of these exit interviews...

BUSH: This is the ultimate exit interview.

QUESTION: ... you think the Republican Party needs to be more inclusive. Who needs to hear that message inside the Republican Party?

BUSH: Yes, you see, I am concerned that -- in the wake of defeat, that the temptation will be to look inward and to say, "Well, here's a litmus test you must adhere to."

This party will come back. And -- but the party's message has got to be that different points of view are included in the party.

And, take, for example, the immigration debate. That's a -- obviously, a highly contentious issue.

And the problem with the outcome of the initial round of the debate was that some people said, "Well, Republicans don't like immigrants." Now, that may be fair or unfair, but that's the image that came out.

And, you know, if the image is "We don't like immigrants," then there's probably somebody else out there saying, "Well, if they don't like immigrants, they probably don't like me, as well."

So, my point was that our party has got to be compassionate and broad-minded.

I remember the 1964 elections.

My dad happened to be running for the United States Senate then, and, you know, got landslided with the Johnson landslide in the state of Texas. But it wasn't just George Bush who got defeated. The Republican Party was pretty well decimated at the time; at least that's what -- I think that's how the pundits viewed it.

And in '66 there was a resurgence. And the same thing can happen this time. But we just got to make sure our message is broad-based and compassionate, that we care about people's lives, and we've got a plan to help them improve their lives.

Jake, yes? How you doing?

QUESTION: I'm good. How you doing, sir?

BUSH: What have been doing since 2000?

QUESTION: Working my way to this chair.

(LAUGHTER)

BUSH: So you going to be here for President Obama?

QUESTION: I will.

BUSH: It's a pretty cool job.

QUESTION: It's not bad.

In the past, when you've been asked to address bad poll numbers or your unpopularity you've said that history will judge that you did the right thing -- that you thought you did the right thing.

But without getting into your motives or your goals, I think a lot of people, including Republicans, including some members of your own administration, have been disappointed at the execution of some of your ideals, whether Iraq or Katrina or the economy.

What would your closing message be to the American people about the execution of these goals?

BUSH: Well, first of all, hard things don't happen overnight, Jake. And when the history of Iraq is written, historians will analyze, for example, the decision on the surge.

The situation was -- looked like it was going fine, and then violence for a period of time began to throw -- throw the progress of Iraq into doubt.

And rather than accepting the status quo and saying, "Oh, it's not worth it," or "The politics makes it difficult," or, you know, "The party may end up being -- you know, not doing well in the elections because of the violence in Iraq," I decided to do something about it and sent 30,000 troops in as opposed to withdrawing.

And so that part of history is certain, and the situation did change.

Now the question is, in the long-run, will this democracy survive? And that's going to be the challenge for future presidents.

In terms of the economy -- look, I inherited a recession, I'm ending on a recession. In the meantime, there were 52 months of uninterrupted job growth. And I defended tax cuts when I campaigned, I helped implement tax cuts when I was president, and I will defend them after my presidency as the right course of action.

And there's a fundamental philosophical debate about tax cuts: Who best can spend your money, the government or you? And I have always sided with the people on that issue.

Now, obviously, these are very difficult economic times. It's a -- when people analyze the situation, there will be a -- this problem started before my presidency. It obviously took place during my presidency.

The question facing the president is not when the problem started, but what did you do about it when you recognized the problem?

And I readily concede I chunked aside some of my free market principles when I was told by chief economic advisers that the situation we were facing could be worse than the Great Depression.

So I've told some of my friends who've said -- you know, who have taken an ideological position on this issue, you know, "Why'd you do what you did?"

I said, "Well, if you were sitting there and heard that the depression could be greater than the Great Depression, I hope you would act too," which I did.

And we've taken extraordinary measures to deal with the frozen credit markets, which have affected the economy. Credit spreads are beginning to shrink. Lending is just beginning to pick up.

The actions we have taken, I believe, have helped thaw the credit markets, which is the first step toward recovery.

And so, you know, look, there's plenty of critics in this business. I understand that. And I thank you for giving me a chance to defend a record that I am going to continue to defend because I think it's a good, strong record.

QUESTION: Thank you, Mr. President. I'd also like to ask you about your critics.

BUSH: Sure. You know any?

QUESTION: Well, a couple of years ago, Charles Krauthammer, columnist and Harvard-trained psychiatrist, coined a term: Bush Derangement Syndrome. It talked about your critics who -- who disagreed with you most passionately; not just your policies, but seemed to take an animosity towards you.

I'm just wondering, as you look back, why you think you engender such passionate criticism, animosity? And do you have any message specifically to those -- to that particular part of the spectrum of your critics?

BUSH: You know, most people I see -- you know, as I'm moving around the country, for example -- they're not angry. And they're not hostile people. And they -- well, you say, "You never meet people who disagree?" It's not true. I've met a lot of people who don't agree with the decisions I make, but they have been civil in their discourse.

So, I view those who get angry and yell and say bad things -- you know, all that kind of stuff, as just a very few people in the country.

I don't know why they get angry. I don't know why they get hostile.

It's not the first time, however, in history that people have expressed themselves in sometimes undignified ways. I've been reading, you know, a lot about Abraham Lincoln during my presidency and there's some pretty harsh discord when it came to the 16th president, just like there's been harsh discord for the 43rd president.

You know, presidents can try to avoid hard decisions, and therefore avoid controversy. That's just not my nature. I'm the kind of person that, you know, is willing to take -- to take on hard -- hard tasks.

And -- and in times of war, people get emotional. I understand that. I've never really, you know, spent that much time, frankly, worrying about the loud voices.

I, of course, hear them. But they didn't affect my policy, nor did they affect -- they affect how I made decisions.

You know, the -- President-elect Obama will find this, too. He'll get in the Oval Office and there'll be a lot of people that are real critical and harsh. And he'll be disappointed, at times, by the tone of the rhetoric. And he's going to have to do what he thinks is right.

And -- and if you don't, I don't see how you can live with yourself. I don't see how I can get back home in Texas and look in the mirror and be proud of what I see if I allowed the loud voices, the loud critics, to -- to prevent me from doing what I thought was necessary to protect this country.

QUESTION: Mr. President, thank you very much.

Since your philosophy is so different from President-elect Obama's, what concerns you the most about what he may attempt to do?

BUSH: You know, I'm not going to speculate about what he's going to do. It's going to be -- you know, he's going to get into the Oval Office, he's going to analyze each situation, and he's going to make the decisions that he think is necessary.

And the other thing is, when I get out of here, I'm getting off the stage. I believe there ought to be, you know, one person in the klieg lights at a time. I've had my time in the klieg lights.

You know, I'm confident -- you know, you'll catch me opining on occasion.

But I wish him all the best. And people say, "Oh, that's just a throwaway line." No. It's not a throwaway line. The stakes are high. There is an enemy that still is out there.

You know, people can maybe try to write that off as, you know, he's trying to set something up. I'm telling you there's an enemy that would like to attack America -- Americans -- again. There just is. That's the reality of the world.

And I wish him all the very best. And, of course, he's going to have his hands full with the economy, I understand. It's tough for a lot of working people out there. The people are concerned about their economic future.

You know, one of the very difficult parts of the decision I made on the financial crisis was to use of hardworking people's money to help prevent there to be a crisis, and in so doing some of that money went into Wall Street firms that caused the crisis in the first place.

I wasn't kidding when I said Wall Street got drunk and we got the hangover.

And -- but, nevertheless, President-elect Obama will find the problems and the situation surrounding problems sometimes cause people to have to make decision that they, you know, weren't initially comfortable with.

And there was such a decision when it came to Wall Street. I mean, I had a lot of people, when out to Midland that time, say, "What the heck are you doing, boy? Those people up East caused the problem." I said, "I know, but if we hadn't worked to fix the problem, your situation would be worse."

And, anyway, I really do wish him all the best.

QUESTION: Mr. President, in recent days, there's been a fair amount of discussion in legal circles about whether or not you might give preemptive pardons, pardons in advance, to officials of your administration who engaged in anything from harsh interrogation tactics to, perhaps, dismissing U.S. attorneys. I'd like to know -- have you given any consideration to this and are you planning on it?

BUSH: I won't be discussing -- I won't be discussing pardons here at this press conference. Would you like to ask another question?

QUESTION: Four years ago, you were asked if you made any mistakes. And I'm not trying to play "gotcha," but I wonder, when you look back over the long arc of your presidency, do you think in retrospect that you have made any mistakes? And, if so, why is the single biggest mistake that you may have made?

BUSH: Gotcha.

Look, I have often said that history will look back and determine that which could have been done better or, you know, mistakes I made.

Clearly, putting a "mission accomplished" on a (sic) aircraft carrier was a mistake. It sent the wrong message. We were trying to say something differently, but, nevertheless, it conveyed a different message.

Obviously, some of my rhetoric has been a mistake.

I've thought long and hard about Katrina; you know, could I have done something differently, like land Air Force One either in New Orleans or Baton Rouge.

The problem with that and -- is that law enforcement would have been pulled away from the mission.

And then your questions, I suspect, would have been, "How could you possibly have flown Air Force One into Baton Rouge, and police officers that were needed to expedite traffic out of New Orleans were taken off the task to look after you?"

I believe that running the Social Security idea right after the '04 elections was a mistake. I should have -- should have argued for immigration reform.

And the reason why is is that -- you know, one of the lessons I learned as governor of Texas, by the way, is legislative branches tend to be risk-averse. In other words, sometimes legislatures have the tendency to ask, "Why should I take on a hard task when the crisis is not eminent (sic)?" And the crisis was not imminent for Social Security as far as many members of Congress were concerned.

As an aside, one thing I proved is that you can actually campaign on the issue and get elected. In other words, I don't believe talking about Social Security is the third rail of American politics. As a matter of fact, think that in the future not talking about how you intend to fix Social Security is going to be the third rail of American politics.

And the -- one thing about the presidency is that you can make -- only make decisions, you know, on the information at hand.

You don't -- you don't get to have information after you've made the decision. That's not the way it works. And you're -- you stand by your decisions and you do your best to explain why you made the decisions you made.

There have been disappointments.

Abu Ghraib, obviously, was a huge disappointment, during the presidency.

You know, not having weapons of mass destruction was a significant disappointment.

I don't know if you want to call those mistakes or not, but they were -- things didn't go according to plan, let's put it that way.

And, anyway, I think historians will look back and they'll be able to have a better look at mistakes, after some time has passed. I -- one of Jake's questions -- there is no such thing as short-term history. I don't think you can possibly get the full breadth of an administration until time has passed.

You know, where does a president's -- did a president's decisions have the impact that he thought they would -- or he thought they would, over time?

Or how did this president compare to future presidents, given a set of circumstances that may be similar or not similar?

I mean, it's just impossible to do and I'm comfortable with that.

QUESTION: One of the major objectives that the incoming administration has talked frequently about is restoring America's moral standing in the world. And many of the allies of the new president -- I believe the president-elect, himself, has talked about how damaged -- that Gitmo, that harsh interrogation tactics that they consider torture, how going to war in Iraq without a U.N. mandate have damaged America's moral standing in the world.

I'm wondering, basically, what is your reaction to that? You think that is something that America -- that the next president needs to work on?

BUSH: I strongly disagree with the assessment that our moral standing has been damaged.

It may be damaged amongst some of the elite. But people still understand America stands for freedom; that America is a country that provides such great hope.

You go to Africa. You ask Africans about American's generosity and compassion. Go to India and ask about, you know, America's -- their view of America. Go to China and ask.

No questions, parts of Europe have said that we shouldn't have gone to war in Iraq without a mandate, but those are few countries.

Most countries in Europe listen to what 1441 said, which is "disclose, disarm, or face serious consequences." Most people take those words seriously.

Now, some countries didn't and -- even though they might have voted for the resolution.

I -- I -- I disagree with this assessment that, you know, people view America in a dim light. I just don't agree with that.

And I understand -- Gitmo has created controversies, but when it came time for those countries that were criticizing America to take some of those -- some of those detainees, they weren't willing to help out.

And -- so, you know, I just disagree with the assessment.

I've -- I listened, I've told people, "Yes, you can try to be popular." In certain quarters in Europe, you can be popular by blaming every Middle Eastern problem on Israel. Or you can be popular by joining the International Criminal Court. I guess I could have been popular by accepting Kyoto, which I felt was a flawed treaty, and proposed something different and more constructive.

And in terms of the decisions that I had made to protect the homeland, I wouldn't worry about popularity. What I would worry about is the Constitution of the United States and putting plans in place that makes it easier to find out what the enemy is thinking. Continued...