In his final State of the Union address on Monday night, President George Bush made it clear that he is not going to coast in his final 11 months in office, issuing challenges to Congress to pass an economic stimulus package, make his tax cuts permanent, keep funding the war in Iraq and focus on the "unfinished business" that lies ahead.

But he also didn't offer up many new ideas, and for the man who five years ago spoke of an "axis of evil" and used previous addresses to announce his intentions of going to war in Iraq and to rattle his saber at terrorists threatening America's security, it was an uncharacteristically tempered speech that sometimes felt like a soft-focus highlight reel of his seven years in office. He gave his speech in front of a clearly divided, partisan-minded Congress, including at least two bitter Democratic presidential rivals who are eagerly looking forward to the end of his term, but who pointedly avoided looking at each other.

The first half of the 53-minute speech focused mainly on an economy Bush said is "undergoing a period of uncertainty." The frank assessment of the recent meltdown in the nation's housing and financial markets led to a call for the quick passage of a $153 billion economic stimulus package, which Bush warned Congress to avoid loading up with unnecessary changes that could "delay or derail it."

"This is a good agreement that will keep our economy growing and our people working, and this Congress must pass it as soon as possible," he said.

Among the other modest economic proposals Bush put forward were:

» Making his tax cuts permanent. Bush warned that not doing so would result in a tax increase. "Some in Washington argue that letting tax relief expire is not a tax increase," he said. "Try explaining that to 116 million American taxpayers who would see their taxes rise by an average of $1,800. Others have said they would personally be happy to pay higher taxes. I welcome their enthusiasm. I'm pleased to report that the IRS accepts both checks and money orders."

» Passing legislation to end what he called a "bias in the tax code" against people who don't get health insurance through an employer.

» The reauthorization of the controversial No Child Left Behind education bill, whose results he said "no one can deny," as well as support for a new $300 million program called Pell Grants for Kids, which would allow low-income children to attend better schools.

As is typical in State of the Union addresses, Bush was interrupted repeatedly by applause, with many of his lines drawing standing ovations, though most were only from the Republican side of the room as many Democrats sat quietly with their hands clasped politely over copies of the address. The chilliness extended to one of the most commented-upon bits of offstage theater: seating arrangements that placed Democratic presidential contenders Senators Hillary Clinton and Barack Obama just a few seats away from each other. The rivals did not appear to make eye contact during the address, and at one point, Clinton leaned across Obama to shake hands with Senator Edward Kennedy — who had enthusiastically endorsed Obama earlier in the day — and Obama appeared to look the other way to avoid Clinton's gaze.

Bush made token mentions of fixing the ailing Social Security, Medicare and Medicaid systems, working on alternative fuels and energy conservation and passing the kind of comprehensive immigration legislation that is unpopular among many Republican legislators, but none of those major goals are likely to be achieved in a year when most are looking to see who will be the next occupant of the White House.

And while Bush mentioned Colombia, Panama, Lebanon, the Ukraine, Burma, Sudan and Zimbabwe, he barely made reference to some of the countries he has repeatedly discussed over the past two years: Iran and North Korean.

The second half of the speech was dominated by foreign affairs, mostly Iraq, where the president seemed relieved to deliver the news that his controversial 30,000 troop "surge" was paying off.

"Some may deny the surge is working," Bush said. "But among the terrorists, there is no doubt. Al Qaeda is on the run in Iraq, and this enemy will be defeated." He also mentioned that 20,000 troops will be coming home in the next few months, but once again stressed that he will offer no timetable for the withdrawal of American troops, warning that doing so could lead to a security meltdown.

"Members of Congress," he said, "having come so far and achieved so much, we must not allow this to happen."

Taking up the task that has enthralled, and typically exasperated, many a late-term president, Bush again said that he hopes to achieve an elusive peace between the Israeli and Palestinian people and to establish a Palestinian homeland by the end of the year.

"The time has come for a holy land, where a democratic Israel and a democratic Palestine live side by side in peace," he said.

Though aides had said that the speech would be a look forward, not a misty glance back at past achievements, Bush, facing some of the lowest approval ratings of his term, did indulge in some nostalgic thoughts.

"Seven years have passed since I first stood before you at this rostrum," he said, a glint of a smile crossing his face as he began his final Union address. "In that time, our country has been tested in ways none of us could have imagined. We have faced hard decisions about peace and war, rising competition in the world economy, and the health and welfare of our citizens. These issues call for vigorous debate, and I think it's fair to say we've answered the call. Yet history will record that amid our differences, we acted with purpose. And together, we showed the world the power and resilience of American self-government.

"All of us were sent to Washington to carry out the people's business. That is the purpose of this body. It is the meaning of our oath. It remains our charge to keep."