Why Obama won't call terror fight a war on radical Islam

"We are in a religious war with radical Islamists," Sen. Lindsey Graham proclaimed on Fox News earlier this month. "When I hear the President of the United States and his chief spokesperson failing to admit that we're in a religious war, it really bothers me."

But Obama said the U.S. needs to be wary of handing terrorists "the victory of overinflating" their actions and the threat they pose to the U.S.

Obama emphasized that while he is mindful of the "terrible costs of terrorism," terror groups aren't an "existential threat to the United States or the world order."

"The truth of the matter is that they can do harm. But we have the capacity to control how we respond in ways that do not undercut what's the essence of who we are. That means that we don't torture, for example, and thereby undermine our values and credibility around the world," Obama said. "It means that we don't approach this with a strategy of sending out occupying armies and playing whack-a-mole wherever a terrorist group appears because that drains our economic strength and it puts enormous burdens on our military."

The U.S. needs to instead keep its response "surgical," Obama said, to address the specific threat the U.S. faces without alienating the majority of Muslims who are peaceful and reject extremism -- those who "have embraced a nihilistic, violent, almost medieval interpretation of Islam."