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AN EXCLUSIVE WHITE HOUSE INTERVIEW

The morning after a holiday party, Barack and Michelle Obama were still chuckling about a 5-year-old boy who had told them a joke on the receiving line. They meet a lot of people but recalled this little boy especially fondly. During the interview with PEOPLE Managing Editor Larry Hackett and D.C. correspondent Sandra Sobieraj Westfall, the laughs came freely, and the President delighted in discussing his own kids; his voice became somber only when noting that Sasha and Malia's childhoods were flying by. Then, eight days after that Dec. 6 chat, tragedy struck. "Our hearts are broken," Obama said after the Sandy Hook Elementary shooting. The week before was dominated by economic talk, but now a new agenda emerged: "Are we really prepared to say that we're powerless in the face of such carnage, that the politics are too hard? ... Surely we can do better."

The movie Lincoln shows a man revered for his principles yet willing to do the dirty work of cutting deals for the greater good. A reader, Daphne from New York, asks if you took any lesson from the movie about how to approach your second term.

THE PRESIDENT: As a rule, if you're President of the United States, you should not compare yourself to Lincoln-[Laughs]-in any way. But it's a reminder that getting things done in this town requires a balance between idealism and principle with a willingness to get your hands dirty. That engagement with Congress-that's how I got health care passed. The notion that we haven't been deep in the thick of things to get some of the things we have gotten accomplished done is probably one of the biggest misinterpretations of the first four years.

So do you think the recent criticism about your personal persuasion [in negotiations with Congress] is unfair? Or do you think there's room for improvement?

THE PRESIDENT: The dynamic in Washington over the last four years has been driven less by personal relationships or the lack of personal relationships and more by a very fierce ideological rigidity, I would obviously argue, on the other side. They might argue it was on our side. I think John Boehner oftentimes has wanted to work with me on certain issues but could not because the Tea Party or Rush Limbaugh or Fox News would not allow it. So part of my goal is to continue to reach out-there's always things that I can do better. But the most important influence on getting things done in Washington is the American people. Lincoln was famous for saying that with public opinion there's nothing you can't do, and without it there's nothing you can do.

Mrs. Obama, do you expect you'll take more of a role in sustaining that public opinion out on the road?

MRS. OBAMA: I'm not one for lip service, so I become very practical about what I can do because I have limited powers. I will continue to work on the issues of childhood obesity because the goals we set were generational and we're not done yet. The same thing is true with military spouses and families because we're now going to see those challenges up close and personal as these wars are drawn down. So I'm very happy we have another four years. I work for the President, so we'll see what you do.

THE PRESIDENT: Let's just be clear, when she says she works for me, that's in the public policy arena. [Laughs]

MRS. OBAMA: Absolutely. Not at home.

THE PRESIDENT: The roles are quite reversed.

What was the moment on Election Night like when you and your girls realized you'd won?

MRS. OBAMA: Really, election nights are so fraught with everything-you've got friends, family, you're getting ready. There are a lot of logistics. You look up and it's like, "Okay, did Dad win? All right, cool. That's good."

THE PRESIDENT: It's like a wedding: You're hoping everybody is having fun at the reception, that Aunt Mabel is getting a ride home, the crazy cousin didn't drink too much.

Another reader, Angelina Perez, asks what your girls dream of becoming.

MRS. OBAMA: Malia has expressed some interest in filmmaking. Just like her father, she is an avid reader, and she enjoys movies. But she's a freshman, so she also knows she has years in college to explore her interest. Sasha, what she likes today will change in an hour. So she doesn't even try and lay it out yet. I want them to be as open to possibilities as possible.

Do you have a list of things you want to do as a family before Malia is off to college in three years?

THE PRESIDENT: We would love to travel more with them. There's some unique opportunities as President, when I'm on a foreign trip, to make sure they're going with us. They're great travelers too. They're just fun to be with. They're curious, and they're engaged, and they're easy.

MRS. OBAMA: They're great ambassadors. And there's just a breadth of possibilities right in this country. So my hope is that we continue to hit every national park, because it's not just a great experience as a family, but it's a way to highlight to the rest of the country that we have some phenomenal resources here.

You've made jokes about the Secret Service keeping boys away from Malia. Has she asked for a moratorium on those?

THE PRESIDENT: She actually doesn't pay any attention to what I say. [Laughs] The great thing about the girls is they've got a wonderful role model in their mom. They've seen how Michelle and I interact-not only the love but also respect that I show to their mom. So I think they have pretty high expectations about how relationships should be, and that gives me some confidence about the future. I joke about this stuff sometimes, but the truth is they are smart, steady young women.

MRS. OBAMA: And that's the best protection.

THE PRESIDENT: What you want is somebody who's confident and strong and expects to be treated with respect. That's already in them. So I think they're going to be in a good spot when that comes.

Will you be in a good spot when that comes?

THE PRESIDENT: There's something about your daughters that just breaks your heart. And that's not really even an issue of dating. It's just watching them grow up. When I think about the fact that Malia will be out of my house in four years, it chokes me up. The finite amount of time you have with your children, and the joy they bring on a minute-to-minute, day-by-day basis-the idea that that's not there all the time is something that can hit me hard sometimes. So all the other stuff about their dating, their going out on weekends with their friends and all that stuff is to me just a manifestation of that sense that time is precious, because it's going to go by really fast.

Now that we've depressed you, let's do the fun stuff. What song is stuck in your head these days?

THE PRESIDENT: "Charlie Brown Christmas."

MRS. OBAMA: Oh, yes, we've been singing that a lot.

THE PRESIDENT & MRS. OBAMA [Singing]: Christmas time is here ...

THE PRESIDENT: And then we make our mouths like the Charlie Brown characters.

MRS. OBAMA: That's my favorite part! Malia's trying to learn that song [on the piano], so she's been playing it every day.

A movie you loved so much the past year you'd see it again?

THE PRESIDENT: Beasts of the Southern Wild was spectacular. We saw it with friends and my nieces, one of whom is only 4 years old, and it captivated all of them. Life of Pi was good-because we had read that book together. Argo I thought was terrific. Ben Affleck did a nice job.

Anything the girls are into that you are embarrassed to say you like too?

THE PRESIDENT: No. They're cooler than I am. There are things I like that they think are cheesy, like "Gangnam Style." I love that.

Have you done the dance?

MRS. OBAMA: That's a little embarrassing.

THE PRESIDENT: Of course I have, but I'm not going to be doing it in front of you.

Do you gallop around just to embarrass them?

THE PRESIDENT: Absolutely!

What did you go to bed reading last night?

MRS. OBAMA: I haven't been able to read in nine months. So I'm going to get a collection of books for, hopefully, what will be a nice vacation. If I sit for a second, I'm out.

THE PRESIDENT: It's hard to read during campaigns because you actually are moving nonstop, and then when you're done you're just tired. You just go to bed-or I watch SportsCenter and that's it. Last night I read a bunch of briefing books. One of the things about being elected this time was you have this parallel job that didn't stop.

MRS. OBAMA: It was kind of sad the day after the election. We came back Wednesday night. We're all wiped out. The girls had to go to school. I got up, worked out, and there he is at the table, breakfast, suit on, briefing books. I was like, "Wow, that's it?" It was just like nothing had happened; he's just going over his stuff. It was like Groundhog Day.

THE PRESIDENT: But I am reading the new Toni Morrison book, Home.

MRS. OBAMA: How is it?

THE PRESIDENT: Beautiful. I love it.

MRS. OBAMA: I'll get that from you.

Are you making room on the shelf for her Grammy?

MRS. OBAMA: Oh, did you hear?

THE PRESIDENT: Were you nominated for something?

MRS. OBAMA: Yes.

THE PRESIDENT: For what?

MRS. OBAMA: The garden book American Grown-the audio version of it.

THE PRESIDENT: Well, when you win two, like me, then let me know.

MRS. OBAMA: [Laughs] Snap-oh!

Finally, this time next year, what will have changed for the country?

THE PRESIDENT: Well, I continue to be optimistic. We have an opportunity in which Republicans and Democrats come together and say, "We don't want to impose too high a tax burden, but there are things that we think are important in this society." We're going to invest in education; improve our roads, bridges and airports; take care of folks who are vulnerable. America is on the cusp of locking in its leadership around the world for another century. What's been stopping us is, in part, dysfunction here in Washington. If we can break through some of that, I think the field is wide-open for us. And who knows, if we can get a good fiscal package done, then you might see the shift in tone that people long for. Although I don't want to over-romanticize it. You asked what lessons did I learn from Lincoln? It's useful to be reminded: Democracy is hard. But it's the best system there is to make sure that everybody is able to pursue their dreams.