President Obama described the killing of Anwar al-Aulaqi in a drone strike Friday as a “major blow” to al-Qaeda’s affiliate in Yemen and a “significant milestone” in the broader fight against al Qaeda.

President Barack Obama speaks on the killing of US-born Imam Anwar al-Aulaqi in Yemen, Friday, Sept. 30, 2011, during a 'Change of Office' ceremony at Ft. Myer in Arlington, Va. (Pablo Martinez Monsivais/AP)

“Al Qaeda in the Arabian Peninsula remains a dangerous but weakened terrorist organization,” said Obama. He also singled out the U.S. intelligence community and the Yemeni forces for praise.

Mullen did not refer to Aulaqi or the Yemeni-based terrorist group in his remarks. Rather he suggested that the ongoing war in Afghanistan and future cuts to the defense budget represent the biggest problems his successor would face.

The outgoing chairman of the Joint Chiefs of Staff also made an impassioned plea to the country to do more to provide jobs and opportunity for troops leaving the military at a time of economic hardship. During his four-year tenure Mullen raised the profile of the chairman’s office, making it a much more central player in the planning and execution of the Iraq and Afghan wars.

He essentially dismissed the top battlefield commander in Afghanistan 2009 and was a key proponent in favor of sending tens of thousands of additional U.S. troops to the war. Mullen is being replaced by Gen. Martin Dempsey, who rose to prominence during two tours in Iraq. He was sworn into the post at the end of the ceremony.

In Afghanistan, Mullen said that the U.S. would have to fight hard to make sure recent security gains are not “squandered by the scourge of corruption or the lack of good governance that still plagues the country.”

Mullen had been one of Pakistan’s staunchest defenders in Washington, but last week sharply criticized the country’s intelligence service for its close ties to an anti-American insurgent network. He urged his successor on Friday “to try and do a better job than I did with that vexing and yet vital relationship.”

Like Gen. David H. Petraeus, who retired last month, Mullen worried that the America’s economic crisis would lead to deep cuts in the defense budget. “Cuts in defense spending are fair game. We should do our part,” Mullen said. “But cut too deeply, and we will burn the very blanket of protection we have been charged to provide our fellow citizens. Cut too deeply now, and we will harm, perhaps irreparably, the industrial base from which we must procure the materials of war.”

Mullen closed with a plea to the country to do a better job of welcoming troops who have spent much of the last decade at war back into civilian society. “Hire them. Help them buy a home. Get them started on a path to an education,” Mullen said. “The wars you sent these young men and women to fight aren’t exactly foremost on everyone’s minds. But they fought them for you. They’re still fighting them ... for you.”

The president, the vice president and the defense secretary all attended Mullen’s retirement. None of officials attended Petraeus’ retirement. The chairman is the president’s top military adviser and the president typically attends his swearing into office and retirement. It would have been a break with past protocol to attend the ceremony honoring Petraeus.

The President did speak and stand next to Petraeus when he was nominated to his new post leading the CIA, a White House spokesman said.