Despite the deaths of more than 1,300 U.S. military personnel and the multibillion-dollar price tag, the ouster of Saddam justified the invasion, he said.
"The removal of Saddam Hussein has made America safer because a dictator, a tyrant, a thug, with whom we had been at war in the past, who was destabilizing a vital part of the world, who was paying the families of suicide bombers, is no longer in power," Bush said. "And he no longer has the capacity to reconstitute a weapons program. ... Yes, it's worth it."
The president and first lady also discussed the South Asian tsunami and the enormous humanitarian challenge it left in its wake. The tragedy has given Americans an opportunity to show the Muslim world their compassion, Bush said.
"Our public diplomacy efforts aren't very robust, aren't very good, compared to the public diplomacy efforts of those who would like to spread hatred and vilify the United States," he said.
Through America's outpouring of private and government contributions in response to the tsunami, which struck the world's most populous Muslim nation, Indonesia, hardest, Bush said, "Many in the Muslim world have seen a great compassion in the American people."
Through the presence of U.S. troops, aid organizations and money in the affected countries, "people are seeing the concrete actions of a compassionate country," he told Walters.
Bush's second-term inauguration will take place Jan. 20, just 10 days before Iraqis are set to vote in their first national elections since Saddam's overthrow. While the pending vote is fraught with danger, as insurgents continue to target U.S. troops and U.S.-trained Iraqi officers, Bush said he is committed to moving the political process forward in Iraq.
He said he had no timetable for the removal of U.S. troops, saying they need to stay to train more Iraqi troops. "We have to stay to train Iraqis so they can get rid of them. And I think that's how you solve this riddle," he said.
"It's a miracle they're voting, by the way, I think," he said. "What a spectacular three months when you think about it. Afghanistan had a vote. The Palestinians voted. And Iraqis will vote on the 30th, and right after that, we look forward to working the newly constituted assembly that will form a government."
In the presidential campaign, pundits characterized the country as largely polarized between Republican and Democratic states and Bush was criticized by Kerry as having failed to unite Americans during his first term.
While the president said he doesn't feel Americans are as divided as the media suggest, he said, "I intend to work to unite the country. People go out and explain their positions. No candidate gets 100 percent of the vote. In modern history, most elections are very close."
Chief among his domestic policy goals, Bush said, will be a major overhaul of the Social Security system. Bush has said he wants to foster an "ownership society," giving Americans more responsibility for managing their health care and retirement investments.