He insisted the transfer would not endanger Americans and promised to work with lawmakers to develop a system for holding detainees who can't be tried and can't be turned loose from the Navy-run prison in Cuba. He spoke one day after the Senate voted resoundingly to deny him money to close the prison.
"There are no neat or easy answers here," Mr. Obama said in a speech in which he pledged anew to clean up what he said was "quite simply a mess" at Guantanamo that he had inherited from the Bush administration.
Moments after Mr. Obama concluded, former Vice President Dick Cheney delivered his own address across town defending the decisions of the Bush administration in dealing with terrorism. Expressing no remorse for the actions the Bush White House had ordered, Cheney said under the same circumstances he would make the same decisions "without hesitation." (Read more on Cheney's speech in Hotsheet.)
Mr. Obama noted that roughly 500 detainees already had been released by the Bush administration. There are 240 at Guantanamo now. The president said that 50 of those had been cleared to be sent to other countries - although he did not identify which countries might be willing to take them.
Mr. Obama conceded that some Guantanamo detainees would end up in U.S. prisons and said those facilities were tough enough to house even the most dangerous inmates.
The president decried arguments used against his plans.
"We will be ill-served by the fear-mongering that emerges whenever we discuss this issue," he declared.
Speaking at the National Archives, Mr. Obama said he wouldn't do anything to endanger the American people.
He said opening and continuing the military prison "set back the moral authority that is America's strongest currency in the world."
Mr. Obama spoke in front of a copy of the Constitution, to members of the Judge Advocate General's Corps, diplomatic, policy and development officials and representatives of civil liberties groups.
"I can tell you that the wrong answer is to pretend like this problem will go away if we maintain an unsustainable status quo," Mr. Obama said. "As president, I refuse to allow this problem to fester. Our security interests won't permit it. Our courts won't allow it. And neither should our conscience."
Mr. Obama said his administration was in the process of studying each of the remaining Guantanamo detainees "to determine the appropriate policies for dealing with them."
"Nobody has ever escaped from one of our `supermax' prisons which hold hundreds of convicted terrorists," Obama said.
Mr. Obama used the speech as an effort to try to retake the initiative on the matter. He spoke a day after the Senate, led by majority Democrats, followed the lead of the House and voted decisively to deny his request for $80 million to close the prison. Lawmakers said they would block the funds until he gave a more detailed accounting of what would happen to the detainees.
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He sought to do that in his speech, but stopped short of offering a clear answer on the key question of what to do with detainees who won't be tried for war crimes but are likely to be held indefinitely.
He described this group as those "who cannot be prosecuted yet who pose a clear danger to the American people."
"I want to be honest: This is the toughest issue we will face," Obama said.
He said his administration would "exhaust every avenue that we have" to prosecute detainees but there would still be some left "who cannot be prosecuted for past crimes" yet remain a threat.
Among these, he said, are prisoners who have expressed allegiance to Osama bin Laden "or otherwise made it clear they want to kill Americans."
"So going forward, my administration will work with Congress to develop an appropriate legal regime" to handle such detainees "so that our efforts are consistent with our values and our Constitution."
"We do not have the luxury of starting from scratch," an administration official told CBS News White House correspondent Mark Knoller.
Mr. Obama criticized what he said was an effort to politicize the issue.
"I know that the politics in Congress will be difficult. These issues are fodder for 30-second commercials and direct mail pieces that are designed to frighten. I get it. But if we continue to make decisions from within a climate of fear, we will make more mistakes," he said.
But at the same time, he strongly criticized former President George W. Bush's actions. "Our government made decisions based upon fear rather than foresight and all too often trimmed facts and evidence to fit ideological predispositions," he said.
"In other words, we went off course."
The president again rejected the idea of an independent commission that would investigate the whole range of national security issues under the Bush administration.
"I recognize that many still have a strong desire to focus on the past. When it comes to the actions of the last eight years, some Americans are angry; others want to re-fight debates that have been settled, most clearly at the ballot box in November," Mr. Obama said.
"I know that these debates lead directly to a call for a fuller accounting, perhaps through an independent commission," he said. But he insisted that "our existing democratic institutions are strong enough to deliver accountability."
He also defended his decision to try to block the court-ordered release of detainee abuse photos. "Release would inflame anti-American opinion" and threaten American soldiers serving in Iraq and Afghanistan, Mr. Obama said. His decision against releasing the photos has been criticized by human-rights groups.
Mr. Obama had first suggested he would allow the photos to be released, but changed his mind after listening to advice from the military and intelligence advisers.
On another recent controversy, he defended his decision to release CIA interrogation memos, saying there was "no overriding reason to protect them." He said the interrogation methods, which included waterboarding, were already known - and that he had banned them.
But, the former vice president said, the current administration's actions on Guantanamo and other steps in the war against terrorism "should not be based on slogans and campaign rhetoric, but on a truthful telling of history."
Cheney has become the most outspoken high-ranking Bush official in criticizing the Obama team, suggesting steps the new president has taken have made the country less safe.
Cheney denounced Mr. Obama's announcement on his second day in office that he would close Guantanamo. He said the decision came with "little deliberation and no plan."
"Now, the president says some of these terrorists should be brought to American soil for trial in our court system. Others, he says, will be shipped to third countries. But so far, the United States has had little luck getting other countries to take hardened terrorists."
Cheney spoke at the American Enterprise Institute, a conservative think tank.
The former Vice President suggested that when terrorists "see the American government caught up in arguments about interrogations or whether foreign terrorists have constitutional rights, they don't stand back in awe of our legal system and wonder whether they had misjudged us all along."
"Instead, the terrorists see just what they were hoping for: our unity gone, our resolve shaken, our leaders distracted," he said. "In short, they see weakness and opportunity."