Drawing distinctions between two international threats, President Bush said Tuesday he is confident North Korea's nuclear buildup can be stopped diplomatically, but warned that Saddam Hussein "has not heard the message" and may be headed toward conflict with the United States.

The president said he had not decided whether to wage war with Iraq, but suggested the economic cost of going to war to eliminate Saddam's weapons of mass destruction is better than risking an attack from them.

"An attack from Saddam Hussein or a surrogate of Saddam Hussein would cripple our economy," Bush said as he stopped for lunch at a local diner near his Texas ranch. "This economy cannot afford to stand an attack."

Bush made the comment in response to a question about reports that his administration was ready to spend between $50 billion to $60 billion to disarm Saddam.

In his first public remarks on North Korea in two weeks, Bush said "all options, of course, are always on the table for any president," but he also suggested that military conflict is not being considered.

"I believe this is not a military showdown. This is a diplomatic showdown," Bush said, adding that he thought the confrontation could be resolved peacefully.

He said the United States is working with its allies to help persuade North Korea to abandon its nuclear program. In violation of a 1994 deal with the Clinton White House, Pyongyang has restarted its efforts to develop nuclear weapons and add to a stockpile that U.S. officials believe already consists of one or two bombs.

Bush is coming under criticism for treating Iraq as a greater threat than North Korea, when the United States has not proven whether Saddam has nuclear, chemical or biological weapons.

Asked to explain the distinction, Bush said that Saddam had been close to developing a nuclear weapon in the 1990s and said Iraq has flouted efforts to curb his aggression for 11 years.

He said Saddam's first attempt to comply with the latest United Nations arms resolution -- a declaration of the status of his weapons program -- "was discouraging." U.S. and U.N. officials have said the document had glaring omissions, and the Bush administration declared Saddam in "material breach" of his U.N. agreements, a step that could be used to justify military action.

"Thus far, it appears at first look that Saddam Hussein hasn't heard the message," Bush said.

The president responded abruptly when a reporter suggested that war was inevitable.

"You say we're headed to war in Iraq. I don't know why you suggested that," he said. "I'm the person who gets to decide, not you."

His point, Bush said, was that no decision has been made about whether to take military action -- and that it is up to Saddam to comply with the U.N. mandate to avoid war.

As Americans prepared for New Years Eve celebrations, Bush said he personally authorized the FBI to put out an all-points bulletin for five men suspected of being smuggled into the country.

U.S. intelligence said the men came through Canada, but it is unclear whether they have any plans to carry out terrorist acts.

"We don't have any idea or what their intentions might be, but we are mindful that there are still some out there who would try to harm America and harm Americans and so therefore we take every threat seriously, every piece of evidence seriously," Bush said.

On efforts to protect America from future attacks, he said, "It's a lot safer today than it was a year ago, and it's going to be safer after this year than it was this year because the United States of American will continue to lead a vast coalition of freedom-loving countries to disrupt terrorist activities, to hold dictators accountable," he said.

On a separate note, Bush said the Republican Party has not been damaged by Sen. Trent Lott's comments suggesting sympathy with segregation because, he said, Americans know that the GOP cares about equality "regardless of color of skin."

Lott, R-Miss., stepped down as Senate majority leader after harsh criticism from Bush and pressure from his Senate GOP colleagues.