Saddam Hussein "has not heard the message" and may be heading toward a war with the United States, President Bush said Tuesday.

The president, speaking with reporters at his Texas ranch, also said he is confident a diplomatic solution can be reached in the North Korea nuclear buildup.

Bush said he has not yet decided whether to wage war with Iraq, but he added that military action may be necessary -- even at great economic costs. He suggested the United States could not risk letting Iraq strike first.

"Any attack of Saddam Hussein or a surrogate of Saddam Hussein would cripple our economy," the president said. "This economy cannot afford to stand an attack."

The president 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.

Bush said he hoped the showdown with Iraq "will be resolved peacefully," but he added that Iraq's weapons declaration to the U.N. was "short" on specifics.

"He wasn't forthcoming," Bush said of Saddam.

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

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

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

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

He said the United States is working with its allies to help pursuade 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 that 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.

The Associated Press contributed to this report.