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.

Q: [David Cochran] 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.

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.

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.

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.

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.

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.

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.

THE PRESIDENT: Here's -- 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.

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.

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.

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 in 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 is 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.

Listen, thank you all very much. I wish everybody -- truly wish everybody a happy holidays.