President Bush says his biggest priorities for 2006 are winning the fight against terrorism and keeping the U.S. economy growing by creating more jobs. Opposition Democrats say the president is unfairly cutting spending on social programs.

In the year ahead, President Bush says, it is a vital U.S. interest to pursue military, political and economic progress in Iraq, because a free society there makes Americans safer at home.

"As we help Iraq build a peaceful and stable democracy, the United States will gain an ally in the war on terror, inspire reformers across the Middle East and make the American people more secure," said George W. Bush.

In his weekly radio address, the president said U.S. forces are staying on the offensive, while transferring more control to Iraqi units. Mr. Bush said reconstruction efforts are moving forward after earlier setbacks, and the country's political leaders are making progress toward what he called an inclusive, unified and lasting democracy.

The president ended 2005 with a series of speeches meant to reverse falling public support for the war. Mr. Bush has rebounded somewhat from record low approval ratings following relatively peaceful parliamentary elections in Iraq and continued growth in the U.S. economy.

The president says tax cuts, spending restraint and hard work have kept the U.S. economy the envy of the world.

"Inflation is low, productivity is high and small businesses are flourishing," he said. "Real disposable income is up, consumers are confident and early reports suggest good retail sales this holiday season."

To keep the economy moving forward, President Bush called on Congress to approve his budget ending, or reducing about 90 government programs, and cutting social entitlement spending for the first time in nearly a decade.

House Democratic leader Nancy Pelosi says the president's budget has misplaced priorities by cutting funds for health care and education.

"The federal budget should be a statement of our national values," said Nancy Pelosi. "Sadly, the Republican budget fails that test."

Congresswoman Pelosi says Democrats want to expand opportunity and protect the middle class by reducing the deficit and expanding health care for children and veterans.

"Our American sense of community requires that we subsidize home heating for America's families, instead of subsidizing record profits for energy companies,"she said.

President Bush says he is being responsible with taxpayer money, funding national priorities while staying on track to cut the deficit in half by 2009.

After seeing in the New Year on their Texas ranch, the president and Mrs. Bush Sunday visit wounded troops at an Army hospital in the nearby-city of San Antonio, before returning to Washington.