CHARLIE GIBSON (ABC NEWS): Do you feel in any way responsible for what's happening [with the recession]?
DUBYA: You know, I'm the President during this period of time, but I think when the history of this period is written, people will realize a lot of the decisions that were made on Wall Street took place over a decade or so, before I arrived in President, during I arrived in President.

Lieutenant Governor, proud to be with you. This man wear the uniform of the United States military, and I'm proud to be with this veteran, and now public servant for the state of Maryland.

How can you possibly have an international agreement that's effective unless countries like China and India are not full participants?

We're off to a strong start. About to read a — statement that was agreed upon by our distinguished guests. The representatives of the government of the state of Israel and the Palestinian Liberation Organization, represented respectivuh, by Prime Minister Ehud Olmult, and President Mah — Mahoovad Abbas in his capacity as Chairman of the PLO Executive Committee and President of the Palestinian Authority, have convened in Annapolis, Maryland, under the auspices of President George W. Bush of the United States of America.

I'm sorry it's under these circumstances that we have to be together. I hope our presence can help heal your hearts just a little bit.

In addition to making the Protection America Act permanent, I urge Congress to take up other critical proposals included in the comprehensive FISA reform my administration submitted last April.

More Afghans are stepping up to serve and it's in the interest of the United States to help you develop that national army and local police that will send a clear message to the people of Afghanistan that the governments can help provide an opportunity for children to raise their children in a peaceful world.

We talked about the need to stem the narcotics trade. I'm sure the President will comment on this. He understands that it's very important for farmers to be incented to grow crops other than poppy, and that he knows full well the United States is watching, measuring and trying to help eradicate poppy cultivation.

Let me comment on the civilian casualties, if I might. First, I fully understand the angst, the agony and the sorrow that Afghan citizens feel when an innocent life is lost. I know that must cause grief in villages and heartbreak in homes. Secondly, I can assure the Afghan people, like I assured the President, that we do everything we can to protect the innocent; that our military operations are mindful that innocent life might be exposed to danger, and we adjust accordingly. Thirdly, it is the Taliban who surround themselves with innocent life as human shields. The Taliban are the cold-blooded killers. The Taliban are the murderers. The Taliban have no regard for human life. And therefore, we've spent some time talking about — as the President rightly expressed his concerns about civilian casualty. And I assured him that we share those concerns. Secondly, it's up to Iran to prove to the world that they're a stabilizing force as opposed to a destabilizing force. After all, this is a government that has proclaimed its desire to build a nuclear weapon. This is a government that is in defiance of international accord, a government that seems to be willing to thumb its nose at the international community and, at the same time, a government that denies its people a rightful place in the world and denies its people the ability to realize their full potential.

DUBYA: Next time you should cover your bald head.
NICK ROBINSON (BBC): I didn't known you cared.
DUBYA: I don't.

DUBYA: Rutenberg, today's your birthday? How old are you?
JIM RUTENBERG (NEW YORK TIMES): Thirty-eight.
PRIME MINISTER BROWN: My goodness.
DUBYA: Here you are — amazing country, Gordon, guy is under 40 years old, asking me and you questions. It's a beautiful sight.
RUTENBERG: Forty is the new 30, Mr. President.
DUBYA: It's a beautiful sight.
BROWN: Six in my cabinet are under 40.
DUBYA: Are they? You must be feeling damn old, then.

I think it's very important for us to make it clear to those who are in harm's way that these missions will be driven not by local politics but by conditions on the ground, because success in Afghanistan and Iraq will be an integral part of defeating an enemy and helping people realize the great blessings of liberty as the alternative to an ideology of darkness that spreads its murder to achieve its objectives.

There are still setbacks, obviously. We've got these suiciders that are trying to foment sectarian violence.

The comfort women issue is a regrettable chapter in the history of the world, and I accept the Prime Minister's apology. I thought it was very — I thought his statements — Kono's statement, as well as statements here in the United States were very straightforward and from his heart. ...We had a personal visit on the issue. He gave his — he told me what was on his heart about the issue, and I appreciated his candor.

I don't want people blaming our military. We got a bunch of good military people out there doing what we've asked them to do. And the temptation is gonna find scapegoats. Well, if the people want a scapegoat, they got one right here in me 'cause it's my decisions.

PELLEY: Do you think you owe the Iraqi people an apology for not doing a better job?
DUBYA: That we didn't do a better job or they didn't do a better job?
PELLEY: Well, that the United States did not do a better job in providing security after the invasion.
DUBYA: Not at all. I am proud of the efforts we did. We liberated that country from a tyrant. I think the Iraqi people owe the American people a huge debt of gratitude, and I believe most Iraqis express that. I mean, the people understand that we've endured great sacrifice to help them. That's the problem here in America. They wonder whether or not there is a gratitude level that's significant enough in Iraq.

And so I want to thank you all for joining. I got a firsthand report on one of the panels from Laura, who said that — I think if I could summarize your words, it was like really interesting and very important.

Secondly, it's really important, Pete, that people not think government is a loving entity. Government is law and justice. Love comes from the hearts of people that are able to impart love. And therefore, what Craig is doing is — he doesn't realize it — he's a social entrepreneur. He is inspiring others to continue to reach out to say to somebody who is lonely, I love you. And I'm afraid this requires a higher power than the federal government to cause somebody to love somebody.

We, uhh — I made my position clear — about this war on terror. I, uhh — and, and by the way, the enemy made their position clear yet again when they — when — when, umm — when we were able ta — stop 'em, see. And, uhh, I, I — the American people expect us to protect 'em. And therefore, I put this program in place, we believe, strongly believe it's constitutional. And if Al Qaeda is callin' into United States, we wanna know why they're callin'. And so I made my position clear, be interesting to see what other policymakers — how other policymakers react.

And it recognizes that we have got to educate our children — now! — for the skill sets necessary for tomorrow. And this is a better place — there's no better place to talk about that — and there is no better place to talk about that right here at Parkland Magnet Middle School for Aerospace Technology. Thanks for letting us come by. God bless.

The tests show we're fine in the fourth grade in math, and we're okay in eighth grade. They start to slip up prior to going to high school. That is the time to intervene in a child's academic career to make sure he or she has that skill set necessary to become the mathematicians or the scientists or the engineers by the time they get out of college.

Laura and I's spirits are uplifted any time we go to a school that's working, because we understand the importance of public education in the future of our country.

And the best place to start is to make sure every child can read and write and add and subtract. And so that was the spirit behind proposing the No Child Left Behind Act. And as I mentioned, there was a lot of non-partisan cooperation — kind of a rare thing in Washington. But it made sense when it come to public schools.

A pandemic is a lot like a forest fire. If caught early it might be extinguished with limited damage.... A pandemic is unlike other natural disasters. Outbreaks can happen simultaneously in hundreds, or even thousands, of locations at the same time.

A pandemic is a lot like a forest fire. If caught early it might be extinguished with limited damage. If allowed to smolder undetected, it can grow to an inferno that spreads quickly beyond our ability to control it.

By the way, you can't negotiate with these people or reason with them. That's what you've got to understand. These are not the kind of people you sit down and send a counselor over and hope to convince them to change their ways.

Secondly, we're strengthening the defenses at our most important and vulnerable locations. In other words, part of a strategy is ta — to try to figure out where the enemy may attack. You assess your weaknesses, and you build on those — and you, and you, strengthen your weaknesses. That's the — remember, we're, this is a war. This isn't a — you know, maybe a, you know, a ketta, a law enforcement adventure. We're at war with these people, and therefore, during a time of war, you've got to do everything you can to strengthen your defenses. And so we'll continue to enhance protection at our borders and coastlines and airports and bridges and nukyular power pants.

Laura didn't come with me. She's out west with our daughter, Jenna, in the Grand Canyon. How about that? She's doing a great job as the First Lady. She is a fabulous wife and a great mom, and she sends her best to all the good folks who work here at Calvert Cliffs.

DUBYA: I appreciate the Secretary of Energy joining me today. He's a good man, he knows a lot about the subject, you'll be pleased to hear. I was teasing him — he taught at MIT, and — do you have a PhD?
SECRETARY OF ENERGY BODMAN: Yes.
DUBYA: Yes, a PhD. Now I want you to pay careful attention to this — he's the PhD, and I'm the C student, but notice who is the advisor and who is the President.

I want to thank the President and the CEO of Constellation Energy, Mayo Shattuck. That's a pretty cool first name, isn't it, Mayo. Pass the Mayo. His wife, Molly, appreciated that.

I'm proud to report that more Americans are working today than ever before in our nation's history.

Christmastime reminds each of us that we have a duty to our fellow citizens, that we are called to love our neighbor just as we would like to be loved ourselves.

Today, the unemployment rate dropped, as you may know, from 6 percent to 5.9 percent.

We have an obligation to do everything we can to keep this country secure, to never forget the lessons of September the 11th, 2001, to find the enemy before they come again, to stay on the offensive, and to bring these killers to justice, which is what we're going to do. But it hurt our economy when they attacked us, of course. Not only did it change foreign policy, in other words, we can't sit there and pick and choose what threat we deal with. Now that we have become vulnerable, we're going to have deal with the threats before they mature and come upon us. But it hurt our economy. It hurt us pretty bad.

See, when a person has more money in their pocket, they're likely to come to Home Depot.

Our productivity is high. I hope some of it has to do — I know some of it has to do, I hope you understand some of it has to do with the fact that the role of government can help create growth.

And then I obviously made the decision to go into Iraq. And by the way, a free and peaceful Iraq is in our nation's interest. It's in our security interest — that affected the economy. When you turned on your TV, it said, America is marching to war. That's not very conducive for — that's not a very positive statement. It doesn't build a lot of confidence — people, you know, marching to war, why would I want to invest in my home? Or why would I want to come to Home Depot if we're fixing to go to war?

It is — it seems like to me a fantastic opportunity for the country to make sure that the desires of this country are met, and that is every child become a good reader.

Now, there are governors around the state and the country that that have said, look, give us the flexibility to be able to dovetail the Head Start program into our preschool programs so that all students — so we have a better control over whether or not the students are given the skills necessary so that when hold us to account we can achieve that which we want to achieve, which is excellence in the classroom.

I appreciate the desire for flexibility, I support the governor's desire for flexibility so long as, one, federal monies going to the states are used only for Head Start. In other words, what we really don't want to do is say we're going to focus on Head Start, the Head Start money goes for, you know, the prison complex — I know that won't happen with Governor Ehrlich, but there needs to be a guarantee that the federal money spent on Head Start, only go to Head Start. Secondly, states and local governments must put money into the program, which would lock in the Head Start money for Head Start. So, the flexibility given to the State would not allow the state's budget flexibility. Governors ought to have that flexibility to hope that Congress will provide that flexibility so that when the accountability systems kick in, fully kick in, that a governor can truthfully say, well, I've had the tools necessary to make sure the Head Start program fits into an overall comprehensive plan for literacy and math for every child in the state of Maryland, in Governor Ehrlich's case.

I don't know if the people in the State of Maryland know this, I know the Governor does — the teachers here and the program here uses a strategy, what they call a Center for Improving Readiness for Children, Learning and Education, C.I.R.C.L.E., which is a model program.

And the research — I see some of my friends from the National Research Council, the National Institutions of Child Health who are here.

A good education system is one that is going to mean more likely for any country, including ourselves, to be a freer country, and a more democratic country. And [Pakistan's President Musharraf] is — he's taking on the issue in a way that is a visionary and strong.

There's more than two principles at large. There are terrorists who are — still have designs are destabilizing the Pakistan government, and are destroying innocent life.

We believe in freedom. We believe freedom is universal. We believe freedom is — is a gift from the Almighty God for every person, regardless of their race or their religion.

Syria just needs to know we expect full cooperation. And that we strongly urge them not to allow for Baath Party members or Saddam's families or generals on the run to seek safe haven and find safe haven there. We expect them to do everything they can to prevent people who should be held to account from escaping in their country. And if they are in their country, we expect the Syrian authorities to turn them over to the proper folks.

Maybe between the time I left Camp David and here I'll learn more.

And while we grieve the loss of these astronauts, the cause of which they died will continue, America's journey into space will go on.

Columbia carried in its payroll classroom experim — experiments from some of our — ah — students in America.

This government of yours must welcome faith, not discriminate faith, as we deal with the future of this great country.

Secondly, I had a chance to speak to the United Nations to talk about another threat face — that we face — that we face, all of us face, in the civilized world — and that is a threat of weapons of mass destructions in the hands of leaders who disregard human liberty, that do not believe in freedom. A leader, in this case, who's poisoned his own people, poisoned his neighbors, attacked in his neighborhood, and refuses — refuses — to comply with United Nations' regulations, as a matter of fact, defies the United Nations.

I should have clarified it by my statement. I just clarified it by my — not should have, I just.

We're going to talk about our shared values of — recognizes the worth of every individual.

I would remind you that when the inspectors first went into Iraq and were denied — finally denied access, a report came out of the Atomic — the IAEA, that they were six months away from developing a weapon. I don't know what more evidence we need.

On one front is the home front.

We have a renewed appreciation of the character of America. We are a generous people, a thoughtful people who hurt.

We've had oceans which have protected us over our history. Except for Pearl Harbor, we've never really been hit before.

REPORTER: There has been a lot said about how different you [and Tony Blair] are as people. Have you already in your talks found something maybe that you — some personal interest that you have in common, maybe in religion or sport or music?
DUBYA: Well, we both use Colgate toothpaste.