A President Bush who pronounced himself as “feeling pretty upbeat about life these days” met with conservative journalists in the Oval Office Wednesday afternoon.

He gave an optimistic report on progress in Iraq, outlined his hopes for the Middle East peace process following the Annapolis summit, and expressed his resolve on three key issues facing Congress when it’s back in town: He ruled out raising taxes, emphatically insisted that Congress must fund our troops in “harm’s way,” and described Foreign Intelligence Surveillance Act (FISA) reauthorization as crucial.

On Iraq, Bush said sometimes in politics reform happens from the top down, sometimes from the bottom up. “What you’re seeing in Iraq,” he said, “is bottom-up reconciliation taking place that is beginning to influence the central government in profound ways.”

The Iraqi government is about to pass a budget that increases spending by $8 billion and these resources are to be shared with the regions. Bush emphasized the significance of this, because, he argued, once the constitution is in place, sharing national resources is the “crux” of things. He’s encouraged by the wealth of Iraq in contrast to a poorer nation like Afghanistan.

De-Baathification is beginning to take place at the national level because the locals are demanding it, according to Bush. Finally, he sees Iraq’s agreement with us on the principles of a strategic partnership going forward as extremely important. It means Iraq has taken another step toward being transformed into a long-term ally of the United States.

Elsewhere in the Middle East, Bush emphasized that the Israeli-Palestinian process is geared toward reaching an agreement on what a Palestinian state could look like, but there will be no state unless Palestinians meet the conditions that were set out in the “road map.” He is bullish on both Ehud Olmert and Mahmoud Abbas, contrasting them with Yasser Arafat, with whom he refused to deal despite all the international and domestic pressure to do so.

Bush acknowledges that enemies of peace will seek to derail the process by killing people and that we can’t impose our vision on the parties. They need to want it themselves. But he is utterly convinced that enemies can become allies, citing his favorite example of his warm relationship with former Japanese Prime Minister Koizumi after his father fought the Japanese in World War II.

On FISA, Bush said a reauthorization has to “give the professionals the tools they need” and include immunity for companies who cooperated with the government “for the benefit of America.” We need “actionable intelligence” in order to deal “with shadowy networks that are lethal.” Bush promised to “campaign hard on this issue.”

At the end of the interview, the president mentioned that he’s just about to host his first of 25 Christmas parties at the White House. He shared that he’s currently reading A Confederacy of Dunces, and recently finished Jay Winik’s new book, The Great Upheaval. He has Joseph Ellis’s latest book on the Founders (Karl Rove gave it to him). He called Clarence Thomas’s memoir “a sweet book, and book of courage.”

In conclusion, President Bush said of his presidency, “This has been a joyous experience, and still is.” He recounted that when people ask him whether he would do it again, he says “yes” without hesitation. As is often the case in this type of small session, everyone came away impressed with how confident and fluid Bush was. When he said he’s feeling upbeat, he evidently wasn’t kidding.