Bush defends Iraq plan, asks for chance

"Unfortunately, tonight the president demonstrated he has not listened to Americans' single greatest concern: the war in Iraq," she said in a joint statement with Senate Majority Leader Harry Reid, a Nevada Democrat.

Massachusetts Democratic Sen. Edward Kennedy said two of the best words he heard in Bush's speech were "Madame Speaker."

Bush rejected Democratic arguments for pulling American troops out of Baghdad. He said Iraq would be victim of an epic battle between Shi'ite and Sunni extremists and Iraq's government would be overrun if U.S. forces step back before Baghdad is secure.

"This is not the fight we entered in Iraq, but it is the fight we are in," he said.

'NEW DIRECTION IN IRAQ'

In the Democratic response, Virginia Sen. Jim Webb, a recently elected Vietnam veteran, said "we need a new direction in Iraq," a policy "that takes our soldiers off the streets of Iraq's cities and a formula that will in short order allow our combat forces to leave Iraq."

The energy proposals by Bush, who has frequently been accused by critics of ignoring global warming, fell short of seeking mandatory caps on carbon emissions sought by some Democrats as well as Europeans.

He would achieve his goal through improved vehicle fuel standards and an increase in production and use of alternative fuels like ethanol.

Bush was not pushing for a specific increase in the Corporate Average Fuel Economy (CAFE) standards, which many experts see as critical to reduce oil usage but which the White House fears would prompt manufacturers to build smaller, less-safe cars.

Instead, he asked Congress for authority to reform CAFE standards for cars with the goal of reducing projected annual gasoline use by up to 8.5 billion gallons.

Bush believes the projected growth in carbon emissions from cars, light trucks and suburban utility vehicles could be stopped in 10 years under his plan.

New York Democratic Sen. Charles Schumer dismissed Bush's proposal, saying "the quickest, most efficient way to reduce gas imports and bring down prices is to increase fuel economy standards."

Bush's health care plan -- making health insurance taxable income and deductible up to $15,000 a year for families starting in 2009 -- could raise taxes for as many as 30 million Americans but he says it would lower costs for many millions more.

(Additional reporting by Thomas Ferraro and Susan Cornwell)