Co-host Elisabeth Hasselbeck asked Obama if his administration is failing the middle class. The president pointed out the country's serious economic situation when he took office and said his policies, such as rescuing the auto industry, have helped.
"The question now for the American people is, how are we going to move forward? Governor Romney, I think is a good man and means well, but the policies he's putting forward are precisely the policies that got us into this mess," Obama said.
"But the American people don't want to just survive," he said. "We want to thrive. I've just got a different vision of how we grow an economy. We grow fastest when the middle class is doing well."
The first lady then interjected, "I'm voting for him," prompting cheers and laughter from the audience.
"What a surprise," Walters responded.
Obama, asked if the attack on the U.S. Consulate in Benghazi, Libya, was terrorism, said the type of weapons used and the length of the assault left "no doubt ... that it wasn't just a mob action."
"The overwhelming majority of Muslims, they want the same things that families here want," he said. "They want opportunity, kids want an education, they want jobs, they want peace. But there are extremist strains that are there."
The president was sporting a dark suit with white shirt and dark-striped tie, while the first lady wore a sleeveless emerald green dress cut below the knee.
The president brought a basket of gifts from the White House for Walters, who celebrated her 83rd birthday Monday. The goodies included White House M&Ms, a deck of Marine One playing cards, some White House beer and a White House golf ball.
Obama quipped he brought the gifts "rather than have her steal napkins" from the White House.
Noting he was the only male on stage, Obama joked, "I told folks I'm just supposed to be eye candy here for you guys."
They also talked about the Obamas' upcoming 20th wedding anniversary, Oct. 3, the night of the first presidential debate.
The Obamas, who held hands most of the taping, discussed their feelings toward each other.
"I like lavishing her with all kinds of attention when she deserves it, and she always deserves it," the president said.
She called him "very loving," "very giving," "very open" and "funny" but added, "I'm funnier."
She disclosed he can raise his voice and get angry at times.
"Yeah, yeah, he does. I can make him mad -- any number of ways," she said.
"By being thoroughly unreasonable," he added, smiling.
The first couple also discussed their daughters, Malia and Sasha.