If this were the Wife of a Republican President, it would be the beginning of the end.
Since this is the Wife of a Democrat President, it's just one big misunderstanding. Mrs. Obama obviously said, I love being an American, or I love the American Flag, or I wish I was married to a Republican.
As always, I could be mistaken, or drunk.
In Britain, Canada or Australia this would cost the Prime Minister his job the day after it hit the media.
Having now watched it a few more times, I am pretty sure she is saying “all this for that fag” meaning all the hoopla surrounding her husband’s presence at the event. He then nods in agreement.