January 25, 2010 12:00 PM

It was their first interview of the New Year on Jan. 8 in the rose-colored library on the ground floor of the White House. President Obama spoke in such a hush about the loneliness of his decisions on war and terrorism that one could hear between his words the tick of an old lighthouse clock across the room. But when talk with PEOPLE Managing Editor Larry Hackett and Washington correspondent Sandra Sobieraj Westfall turned to family, the President, with his hand on his wife’s knee, was all grins, taking turns with First Lady Michelle Obama to gush about their daughters’ adventures.

What were your two proudest moments in the past 12 months?

THE PRESIDENT: Having a health-care bill through the House and the Senate is a potentially historic accomplishment. I’ll be that much prouder when I actually sign it. The other proudest accomplishment happens every single night when I have dinner with my girls and I see how well they’ve adjusted. They are effervescent and happy and doing great in school.

What were the toughest moments?

THE PRESIDENT: When I traveled to Dover [Air Force Base] to see the families of those who had just been killed in a major attack in Afghanistan and then traveled to Fort Hood to grieve with the families of those who had been lost there. It’s a reminder not only of those tragedies, but the incredible sacrifices made by our men and women in uniform every day.

Your Inauguration day was such a time of hope. What do you say to the people who now are feeling a little deflated?

THE PRESIDENT: They have every right to feel deflated because the economy was far worse than any of us expected. The day I was sworn in, we now know that we were in the process of losing 650,000 jobs in December, 700,000 jobs in January, another 650,000 in March. So people rightly have been anxious this year. I read, every day, letters from families who are still struggling. As bad as last year was, we really were able to guide our way out of potential disaster. The economy is now growing. We’re on the rebound. Some of the steps we took are now paying off and people should feel great confidence that we are going to be back on track in 2010.

Tell us about watching your girls experience one of the “pinch me” moments from the past year.

MRS. OBAMA: We’ve tried to keep their day-to-day life pretty ordinary, so they seem like the kids that we’ve always known. But we talked about how fun it was just watching as they met the Pope. I think the girls were much more poised and calm in front of the Pope than Grandma and Mama Kaye [their godmother]. It was interesting, the picture of the Pope and Malia and Sasha standing there exchanging conversation: “How’s school?” “It’s fine.”

THE PRESIDENT: Or watching Sasha walk through the Kremlin. It was cold and rainy so she had a classic trench coat, and she was wandering down the halls. She looked like a little spy; we called her Agent 99.

Your husband recently graded himself a B-plus for his first year’s performance. What grade would you give yourself?

MRS. OBAMA: No way am I grading myself. [Laughs.]

THE PRESIDENT: I’ll give her an A, as do, I think, the American people. Way to go.

MRS. OBAMA: Thank you, honey.

What do you make of the criticism by some that you’ve been more dilettantish in your work than made a real impact?

MRS. OBAMA: Oh, gosh, we’ve done a lot. We planted the first White House kitchen garden that’s produced thousands of pounds of food and started this wonderful mentorship program here. We’ve done, along with Jill Biden, tremendous work to shine a light on military families. I stood by my husband while we saw the expansion of the National Service Act, and we’ve continued to build on that energy. I’ve traveled to many countries and hopefully have been able to have an effect there. I felt like I’ve been pretty busy and pretty substantive, but there are always those who want you to do more because there’s so much more to do. One thing I’m excited about is a significant effort this year to reduce the rate of childhood obesity.

Mr. President, after the events of Dec. 25, do you want to reconsider your B-plus?

THE PRESIDENT: When you look at what we’ve done this year on national security, we performed at a very high level in as difficult an environment as you can imagine. I had to make a very difficult decision about Afghanistan. The number of terrorist plots that we disrupted this year was extremely significant. Sadly the intelligence, law enforcement and homeland security communities don’t get credit when they stop things. Nobody is satisfied with the fact that Abdulmutallab was able to get on the plane. I’m holding myself and my team responsible for fixing that situation.

Do you rule out the possibility that U.S. troops may have to go somewhere else—like Yemen?

THE PRESIDENT: I have no intention of sending U.S. boots on the ground in these regions…. I never rule out any possibility in a world this complex. In countries like Yemen and Somalia [we’re] working with international partners.

Confusing new guidelines came out last fall, saying women under 50 don’t necessarily benefit from annual mammograms. Mrs. Obama, you are under 50. Do you get annual X-rays and are you going to change that now?

MRS. OBAMA: I do, and I’m not going to change. I tend to err on the side of caution in every aspect of my health. The broader message to women is that we have to own our health. Listen to advice, but ultimately we’ve got to take care of ourselves.

Can Tiger Woods be rehabilitated?

THE PRESIDENT: Absolutely. I don’t want to comment on his personal relationship with his wife and family, but I’m a strong believer that anybody can look within themselves, find their flaws and fix them. I’m sure he feels terrible about what happened, and I suspect that he will try to put his life back together again.

Favorite movies of the year?

MRS. OBAMA: I liked An Education. And The Hurt Locker was powerful. It sticks in my head. I know what your favorite movie is—Avatar.

THE PRESIDENT: Avatar was very good. And that movie with Maya Rudolph…

MRS. OBAMA: Away We Go.

Any new music on the iPod?

MRS. OBAMA: I like this young woman Ledisi. She’s got that really pretty voice. I always put on oldies. I put on some Motown remix, going back to the roots.

THE PRESIDENT: My iPod is kind of stuck. I just haven’t had time to sit down at a computer.

And there’s nobody that can do that for you, sir?

THE PRESIDENT: You know, there’s Reggie Love, but then all I get is Jay-Z, and I love Jay-Z, but once in a while I might want some Yo-Yo Ma or something.

Have you found this a lonely job?

THE PRESIDENT: I still have not adjusted, and I hope never to adjust entirely, to being in the bubble. Day-to-day spontaneous interactions are missing from my life. And there’s the aspect of loneliness that just has to do with the fact that sending young men and women to war—ultimately that’s your decision. If there’s an attempted terrorist attack, you’ve got to fix it. That side of the loneliness of the job is what I signed up for and I actually think I’m pretty good at.

Looking ahead to this year, what would you like to be better at?

THE PRESIDENT: What I haven’t been able to do in the midst of this crisis is bring the country together in a way that we had done in the Inauguration. That’s what’s been lost this year … that whole sense of changing how Washington works.

And so this year, refocusing on how—whether we’re Democrats or Republicans—we all have common values and care about our kids; we all want work that’s satisfying, pays the bills and gives children a better future and security. Returning to those themes is going to be really important.

And on a personal level, anything you want to be better at this year?

THE PRESIDENT: Resisting pie.

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