President Bush told Congress in his annual State of the Union address that the objective in Iraq this year is to sustain and build upon the gains that were made in 2007.
He said a transition will be made to shift from leading operations to partnering with Iraqi forces and ultimately to assuming a protective overwatch role.
To that end, Mr. Bush said one Army brigade combat team and one Marine Expeditionary Unit have already returned to the U.S. and they will not be replaced.
He said four additional brigades and two Marine battalions will follow suit in the coming months.
In total, this means more than 20,000 troops will be back in the U.S. by the middle of the year.
He said any other withdrawals will depend on conditions on the ground in Iraq.
The president said Sunnis, Shi'ites, and Kurds are working together at the local level to reclaim their communities. He stressed that progress in the provinces must be matched by political progress in Baghdad.
Mr. Bush said after decades of dictatorship and sectarian violence, reconciliation is taking place in Iraq. He added that the Iraqi people are taking control of their future.
Mr. Bush said enemies in Iraq have been hit hard, but they are not yet defeated.
He emphasized that tough fighting remains.
Mr. Bush said failure in Iraq would embolden extremists, strengthen Iran, and give terrorists a base from which to launch new attack.
He stressed that the U.S. will not rest until the enemy is defeated.
Mr. Bush said the U.S is standing against the forces of extremism in Israel and the Palestinian territories. He stressed the time has come for Israel and a democratic Palestine to exist side-by-side in peace.
In the address, President Bush said the addition of U.S. forces in Iraq brought about dramatic improvements in security.
The president said al-Qaida is on the run in Iraq and vowed to defeat the terrorist organization.
Mr. Bush cautioned that there will be tough fighting ahead. The president said U.S. forces are shifting from leading operations to partnering with Iraqi forces.
Mr. Bush also sent referred to Iran. To the people of Iran, the president said the U.S. looks forward to the day citizens of Iran are free. Mr. Bush sent a separate message to Iran's government, calling on it to verifiably suspend nuclear enrichment so that negotiations can begin.
He also called on Iran to stop oppressing its citizens and to stop supporting terrorism abroad.
President Bush has called on Congress to pass as soon as possible a recently announced economic stimulus plan to help the U.S. economy.
He described the legislation as a "good agreement" that will keep the economy growing and Americans working.
President Bush said people must be trusted with their own money and they must be trusted to grow the economy.
Mr. Bush said the economy is undergoing a period of uncertainty.
He sai he knows there is concern about the economic future, but he assured Americans that they can be confident about economic growth in the long run.
He said the United States has added jobs for a record 52 straight months, but said jobs are now growing at a slower pace.
He said wages are up, but so are prices for food and gas. He says exports are rising, but the housing market has declined.
He also called on Congress to make tax relief permanent.
President Bush said a future of energy security is dependent upon the creative genius of American researchers and entrepreneurs. He said they must be trusted to pioneer a new generation of clean energy technology.
Mr. Bush said security, prosperity and the environment all require reducing dependence on oil.
He said Congress should fund new technologies that can generate coal power while capturing carbon emissions.
He said the U.S. should increase the use of
renewable power and emissions-free nuclear power.
Mr. Bush said the U.S. should continue to invest in advanced battery technology and renewable fuels to power the cars and trucks of the future.
Clean Technology Fund
President Bush is calling for the creation of an international clean technology fund.
He says this will help developing nations such as India and China make greater use of clean energy sources.
Mr. Bush also calls for the completion of an international agreement that has the potential to slow, stop and eventually reverse the growth of greenhouse gases.
Climate change has been blamed on greenhouse gas emissions.
Mr. Bush says an international agreement will only be effective if every major economy commits to it. He says the United States is committed to strengthening its energy security and confronting global climate change.
President Bush said people's faith in government is undermined by congressional earmarks -- the spending allocations for projects favored by specific members of Congress.
Last year, the president asked Congress to voluntarily cut the number and cost of earmarks in half, and to stop inserting earmarks into reports that are not brought to a vote.
Mr. Bush said neither goal was met.
He said he will veto appropriations bills that do not cut earmarks in half.
He said he will issue an Executive Order on Tuesday that directs Federal agencies to ignore any future earmark that is not voted on by the Congress.
He said that if these projects are important, Congress should hold a debate and public vote.
Free Trade Agreements
President Bush says American workers will benefit if new markets are opened up overseas.
He says American workers can compete with any in the world.
Mr. Bush says economic growth depends increasingly on the United States' ability to sell crops, goods and services all over the world.
The president said trade agreements will level the playing field and give Americans better access to nearly 100 million customers.
He called on Congress to pass a free trade agreement with Colombia, Panama and South Korea.
He says the first agreement to come before lawmakers will be with Colombia, a friend of the United States. He says if the agreement fails to pass, the "purveyors of false populism in our hemisphere" will be emboldened.
President Bush says passage of the agreement will show neighbors in the region that democracy leads to a better way of life.
He also called on Congress to reauthorize and reform trade adjustment assistance to help displaced workers learn new skills and find new jobs.
Mr. Bush said the U.S. has been tested during the past seven years in ways no one could have imagined.
He said Americans have faced hard decisions about peace and war, rising competition in the world economy, and the health and welfare of U.S. citizens.
Mr. Bush noted that this is an election year, and he called on Republicans and Democrats to cooperate for results at the same time as they compete for votes.
He said progress has been made in the area of protecting the United States, but he said more work must be done.
Mr. Bush emphasized Americans believe in the power of individuals to determine their destiny and shape history.
He said people must trust in the ability of free individuals to make wise decisions.