Q In 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 is no longer on the terrorist threat list. How would you define, if, in fact, there is 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?

THE PRESIDENT: 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 will be the major threat.

North Korea is 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 highly enriched uranium program. And therefore it is really important that out of the six-party talks comes 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 highly enriched uranium program, for example.

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

Yes.

Q You said in an interview earlier this weekend, one of these, I guess, exit interviews, that --

THE PRESIDENT: This is the ultimate exit interview.

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

THE PRESIDENT: You see, I am concerned that, in the wake of the 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. 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 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 what -- 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 the immigrants, they probably don't like me, as well. And so my point was, is 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 State 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 they -- I think that's how the pundits viewed it. And then '66 there was a resurgence. And the same thing can happen this time, but we just got to make sure our message is broad-gauged 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?

Q I'm good. How you doing, sir?

THE PRESIDENT: So what have you been doing since 2000 -- never mind. (Laughter.)

Q Working my way to this chair.

THE PRESIDENT: So are you going to be here for President Obama?

Q I will. I will.

THE PRESIDENT: That's a pretty cool job.

Q It's not bad.

THE PRESIDENT: Yes. (Laughter.)

Q Yours might be better.

THE PRESIDENT: Yes -- what, retirement? (Laughter.)

Q In the past, when you've been asked to address bad poll numbers or your own popularity, 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?

THE PRESIDENT: 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 am 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. When people analyze the situation, there will be -- this problem started before my presidency, it obviously took place during my presidency. The question facing a 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 advisors that the situation we were facing could be worse than the Great Depression.

So I've told some of my friends who said -- you know, who have taken an ideological position on this issue -- why did 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, yes, 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.

Jim.

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

THE PRESIDENT: Sure. You know any? (Laughter.)

Q Well, a couple years ago, Charles Krauthammer, columnist and Harvard-trained psychiatrist, coined a term, "Bush derangement syndrome," to talk about your critics 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 engendered such passionate criticism, animosity, and do you have any message specifically to those -- to that particular part of the spectrum of your critics?

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