(Susan Walsh ~ Associated Press)
"We can all see that growth is slowing," Bush said in a blunt acknowledgment of rising food and gas prices, increasing unemployment and turmoil in the housing and financial markets.
He cautioned against accelerating U.S. troop withdrawals from Iraq, saying that would jeopardize progress achieved over the past year. He said plans already are set for 20,000 troops to come home.
It was his final State of the Union address and he faced a hostile, Democratic-led Congress eager for the end of his term next January. He scolded lawmakers for slipping costly, special-interest projects into bills and promised to use his veto pen to cut them.
With his approval rating near its all-time low, Bush lacked the political clout to push bold ideas and he didn't try. He called on lawmakers to urgently approve a $150 billion plan -- worked out with House leaders -- to avoid or soften any recession through tax rebates for families and incentives for businesses to invest in new plants and equipment.
"The actions of the 110th Congress will affect the security and prosperity of our nation long after this session has ended," the president said.
Senate Democrats want to expand the economic stimulus plan with rebates for senior citizens living off Social Security and extensions of unemployment benefits for the jobless. Bush said those changes "would delay it or derail it and neither option is acceptable."
He also pushed Congress to extend his tax cuts, which are to expire in 2010, and said allowing them to lapse would mean higher tax bills for 116 million American taxpayers. For those who say they're willing to pay more, Bush said, "I welcome their enthusiasm -- pleased to report that the IRS accepts both checks and money orders."
He renewed a proposal to spend $300 million for a "grants for kids" program to help poor children in struggling public schools pay for the cost of attending a private school or a better public school outside their district.
His speech lasted 53 minutes, interrupted frequently by applause, most often by Republican lawmakers.
Delivering the televised Democratic response, Kansas Gov. Kathleen Sebelius urged Bush to work with Congress and help the U.S. regain global standing lost because of the war.
"The last five years have cost us dearly -- in lives lost, in thousands of wounded warriors whose futures may never be the same, in challenges not met here at home because our resources were committed elsewhere," she said. "America's foreign policy has left us with fewer allies and more enemies."