Presidents cant be as loose with their language as you and I. Everyone with any intelligence knows Arafat is a terrorist. It does no one any good for the President to come out and say that Arafat is covered by his statement about protecting terrorists if it means that it forces the US to get militarily involved in Arab/Israeli problems or to prevent the US from using its offices to try to reach a settlement.
I gather your solution is to firebomb all the cities on the West Bank, drive any survivors into Jordan, and then plant millions of landmines on the West Bank to prevent any return.