President Bush says the new year brings new opportunities for progress, and he is looking forward to working with the new Congress.

"The Congress has changed. Our obligations to the country have not changed," he said. "Tomorrow, members of the 110th Congress will take their oath of office and I congratulate them. I welcome their arrival into town. I am looking forward to working with them."

President Bush says he is encouraged by what he says have been productive meetings with leaders from both parties. He says it is time to set aside politics and focus on the nation's future.

Democrats won control of both the House of Representatives and the Senate in November elections that focused largely on voter discontent over the war in Iraq.

With the president preparing what he says will be a new way forward in Iraq, Democratic leaders plan to start their legislative agenda with domestic issues, including a higher minimum wage.

President Bush says the new Congress should make sure it spends the people's money wisely. He says legislators should reform the federal retirement program and subsidized medical care.

He wants Democrats to give him a line-item veto and to rein in spending on legislative earmarks that direct money to specific projects in members' districts, a tactic that has come to be known as pork-barrel politics.

"One important message we all should take from the elections is that people want to end the secretive process by which Washington insiders are able to get billions of dollars directed to projects, many of them pork-barrel projects that have never been reviewed or voted on by the Congress," he said.

The president says he will send Congress a five-year budget proposal that will balance the federal budget by 2012. He says his proposal will restrain spending, but will continue to fund the fight against terrorism.

At a year-end news conference from the White House complex Wednesday, the president said he is looking at all options, including ordering a short-term surge in U.S. forces. But he said he will only deploy more troops if there is a specific mission that can be accomplished with the addition.

The president acknowledged that 2006 was a difficult year for U.S. troops and for Iraqis. But he stressed that the enemy in Iraq needs to understand that it cannot intimidate American forces, and that his administration will not pull out of the country prematurely.

Mr. Bush also said he believes an increase in the size of the U.S. Army and Marine Corps is needed, and he has asked his new defense secretary, Robert Gates, to report to him on plans to enlarge the forces as quickly as possible.

On the economy, Mr. Bush said he supports a Democratic proposal to increase the U.S. minimum wage, but he said it should be coupled with tax and regulatory relief for small businesses. He said he will work with Democrats to keep the economy strong.

He said he would also seek common ground with Democrats to reform the country's immigration laws and its national pension system, Social Security.

The Democrats won control of both houses of Congress in the November general elections.

President Bush says it was a very constructive meeting with Republican leaders who now control Congress and Democratic leaders who will take charge in January.

"We talked about Iraq," he said. "We talked about the need for a new way forward in Iraq. And we talked about the need to work together on this important subject."

The president assured Democrats that the "White House door will be open" when they become the majority party in the next Congress, and said he hopes they can meet regularly.

"The reason you meet on a regular basis is so that the American people can know that we are working hard to find common ground. That is what they expect us to do. They expect us to work on big problems and solve them," he said.

Mr. Bush thanked outgoing Senate Majority Leader Bill Frist and House Speaker Dennis Hastert who lost their leadership positions in last month's electoral defeat for Republicans. With Democrats set to take charge of Congress in January, the president said he looks forward to working with incoming Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi.

Bipartisanship is central to the recommendations of the Iraq Study Group, which said the United States deserves a debate on Iraq that prizes substance over rhetoric.

Among the study group's recommendations are talks with Iran and Syria and the withdrawal of most U.S. combat troops by early 2008.

But, following talks with British Prime Minister Tony Blair Thursday, President Bush said there will be no direct talks with Iran until it gives up what he says is its nuclear weapons program. Iran has long denied that is seeking to make nuclear weapons. It says its nuclear program is for peaceful purposes. Mr. Bush also said there would be no dialogue with Syria until it stops interfering in Lebanon.

As for troop levels, Mr. Bush said he needs to be "flexible and realistic" about U.S. withdrawals from Iraq.

White House spokeswoman Dana Perino said the president will also consider pending reports on Iraq from the Pentagon, State Department, and National Security Council with the goal of making an address to the nation on the issue sometime before Christmas.

In a statement released by the White House December 4, the president credited Bolton with leading negotiations in the U.N. Security Council that resulted in unanimous resolutions on North Korean military and nuclear activities, a resolution calling on Iran to suspend the enrichment and reprocessing of uranium, and a U.N. peacekeeping commitment to Sudan.

Bolton was appointed to the post in August 2005 during a period when the U.S. Senate, which normally would vote on the nomination, was in recess.  Under the U.S. Constitution, a president may make temporary recess appointments without Senate confirmation.

The president re-nominated Bolton on November 9, but administration officials believed that his nomination did not have enough support in the Senate Foreign Relations Committee to come to the full Senate for a confirmation vote.

Bush said some senators were practicing “stubborn obstructionism” by “obstruct[ing] his confirmation” despite Bolton having the support of the majority of the Senate.  “[T]heir tactics will disrupt our diplomatic work at a sensitive and important time,” Bush said.

White House press secretary Tony Snow blamed Bolton’s difficulties in the Senate on “partisanship and not performance,” adding, “for whatever reason the confirmation process seems to be broken.”

The press secretary called on both Republicans and Democrats in the Senate to cooperate on “a confirmation process that allows competent people who share the president’s goals and policies to become confirmed for key positions.”

President Bush, in a statement, said he was "deeply disappointed that a handful of United States senators prevented Ambassador Bolton from receiving the up or down vote he deserved in the Senate."

"They chose to obstruct his confirmation, even though he enjoys majority support in the Senate, and even though their tactics will disrupt our diplomatic work at a sensitive and important time," Bush said. "This stubborn obstructionism ill serves our country, and discourages men and women of talent from serving their nation."

Bush gave Bolton the job temporarily in August 2005, while Congress was in recess. Under that process, the appointment expires when Congress formally adjourns, no later than early January.

The White House resubmitted Bolton's nomination last month. But with Democrats capturing control of the next Congress, his chances of winning confirmation appeared slight. The incoming chairman of the Senate Foreign Relations Committee, Democratic Sen. Joe Biden of Delaware, said he saw "no point in considering Mr. Bolton's nomination again."