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.