America owes a debt of gratitude to all its citizens who volunteer to defend the nation in this time of danger, Bush said tonight from the White House.
"I have cherished meeting these selfless patriots and their families," he said. "And to all our men and women in uniform listening tonight: There has been no higher honor than serving as your commander in chief."
Bush delivered the country's best wishes to his successor President-elect Barack Obama and his family, calling the inauguration of the first African-American president a chance for the world to see the vitality of American democracy.
"This is a moment of hope and pride for our whole nation," the president said.
Bush remarked on the central event of his presidency -- the Sept. 11, 2001, terrorist attacks that killed 3,000 Americans.
"I remember standing in the rubble of the World Trade Center three days later, surrounded by rescuers who had been working around the clock," he said. "I remember talking to brave souls who charged through smoke-filled corridors at the Pentagon and to husbands and wives whose loved ones became heroes aboard Flight 93.
"I remember Arlene Howard, who gave me her fallen son's police shield as a reminder of all that was lost," he said. "And I still carry his badge."
For most Americans, life was able to return to normal, but his never did, the president said. "Every morning, I received a briefing on the threats to our nation," he said. "And I vowed to do everything in my power to keep us safe."
Bush spoke of the accomplishments that grew out of 9/11 including the establishment of the Department of Homeland Security, the transformation of the military and improved cooperation among intelligence and law enforcement agencies.
"Our nation is equipped with new tools to monitor the terrorists' movements, freeze their finances and break up their plots," he said. "And with strong allies at our side, we have taken the fight to the terrorists and those who support them."
Soon after the 9/11 attacks, coalition forces went into Afghanistan to eliminate the safe havens from which al-Qaida terrorists planned, trained for and financed the attacks.
"Afghanistan has gone from a nation where the Taliban harbored al-Qaida and stoned women in the streets to a young democracy that is fighting terror and encouraging girls to go to school," Bush said.
U.S. forces also participated in providing freedom to millions of Iraqis who lived under a brutal dictatorship. The country was once a sworn enemy of America, but is now "an Arab democracy at the heart of the Middle East and a friend of the United States," the president said.
Bush admitted that there is legitimate debate about many of his decisions. "But there can be little debate about the results," he said.
"America has gone more than seven years without another terrorist attack on our soil," he continued. "This is a tribute to those who toil day and night to keep us safe -- law enforcement officers, intelligence analysts, homeland security and diplomatic personnel, and the men and women of the United States armed forces."
The president said the battles in Iraq and Afghanistan are part of a larger ideological conflict between two radically differing visions of the future.
"Under one, a small band of fanatics demands total obedience to an oppressive ideology, condemns women to subservience and marks unbelievers for murder," he said. "The other system is based on the conviction that freedom is the universal gift of Almighty God and that liberty and justice light the path to peace."
Advancing the belief in freedom and justice is the only way for America to defend itself, Bush said. "When people live in freedom, they do not willingly choose leaders who pursue campaigns of terror," he said. "When people have hope in the future, they will not cede their lives to violence and extremism."
He may have done some things differently, Bush said. "Yet I have always acted with the best interests of our country in mind," he said. "I have followed my conscience and done what I thought was right. You may not agree with some tough decisions I have made. But I hope you can agree that I was willing to make the tough decisions."
The president said terrorism remains the greatest threat to the United States.
"Our enemies are patient and determined to strike again," he said. "America did nothing to seek or deserve this conflict. But we have been given solemn responsibilities, and we must meet them. We must resist complacency. We must keep our resolve. And we must never let down our guard."
America must continue to engage with the nations of the world and reject isolationism and protectionism, he said. Retreating would only invite danger.
"In the 21st century, security and prosperity at home depend on the expansion of liberty abroad," he said. "If America does not lead the cause of freedom, that cause will not be led."
America must maintain its moral clarity in the future. "I have often spoken to you about good and evil, and this has made some uncomfortable," he said. "But good and evil are present in this world, and between the two there can be no compromise. Murdering the innocent to advance an ideology is wrong every time, everywhere. Freeing people from oppression and despair is eternally right.
"This nation must continue to speak out for justice and truth. We must always be willing to act in their defense and to advance the cause of peace," the president said.
Even in tough times, Bush remains optimistic because he has faith in Americans.
He spoke of Marine Staff Sgt. Aubrey McDade, who charged into an ambush in Iraq and rescued three of his fellow Marines, and of Dr. Bill Krissoff, a surgeon from California.
"His son Nathan, a Marine, gave his life in Iraq," Bush said. "When I met Dr. Krissoff and his family, he delivered some surprising news: He told me he wanted to join the Navy Medical Corps in honor of his son."
Krissoff was 60 years old - 18 years above the age limit -- but his petition for a waiver was granted. "For the past year he has trained in battlefield medicine," the president said. Now a lieutenant commander, he soon will deploy to Iraq where he will help save America's wounded warriors and uphold the legacy of his fallen son.
"In citizens like these, we see the best of our country -- resilient and hopeful, caring and strong," the president said. "These virtues give me an unshakable faith in America. We have faced danger and trial, and there is more ahead. But with the courage of our people and confidence in our ideals, this great nation will never tire, never falter, and never fail."