By Kim Ghattas
BBC News, Washington
George W Bush may be seen by many as a lame-duck president, but he tried hard to sound forceful and underline that he is still relevant.
Wearing a light blue tie and a dark suit, the president Bush sounded comfortable with his speech, but even he admitted there was much unfinished business. He used the word veto twice, making clear he would use his powers, mainly on tax-related issues.
"Members of Congress should know: if any bill raising taxes reaches my desk, I will veto it."
He also warned Congress against trying to add anything to the $150bn (£76bn) economy stimulus package, warning that would risk derailing or delaying it.
The package, mostly drawn up by the Bush administration, was approved last week after much negotiation and compromise between Democratic and Republican congressional leaders.
It is hoped it will help stave off a recession, although many say tax cuts are not a long-term fix to the economic woes facing the US.
The president attempted to be reassuring and talked about the need to be confident, trust the people with their own money and empower them to help the economy grow.
However, criticism was quick to come from Democratic circles.
Presidential hopeful Senator Barack Obama highlighted what he described as a big gap between the sense of urgency that the public felt and the way Mr Bush spoke, saying people wanted something much more robust than tax cuts.
"We know it was George Bush's Washington that let the banks and
financial institutions run amok, and take our economy down this
dangerous road," Mr Obama said.
In an editorial, the New York Times wrote that "the nation is splintered over the war in Iraq, cleaved by ruthless partisan politics, bubbling with economic fear and mired in debate over virtually all of the issues Mr Bush faced in 2002.
"And the best Mr Bush could offer was a call to individual empowerment - a noble idea, but in Mr Bush's hands just another excuse to abdicate government responsibility."
Mr Bush made some references to the "last seven years", mostly in connection to the attacks of 9/11 and events linked to his "freedom agenda", like the fall of the Taleban regime and the pro-democracy demonstrations in Lebanon.
But, overall, the speech was more forward-looking than reflective.
Although most presidents would use their (probable) last State of the Union to burnish their legacy, Mr Bush seemed acutely aware that as the most controversial US president in recent years, it was perhaps best to steer clear even of the word itself.
Mrs Clinton criticised Mr Bush for "failure after failure" in Iraq
He did talk modestly about the successes in Iraq and said that the "American and Iraqi surges have achieved results few of us could have imagined just one year ago".
He insisted that al-Qaeda was on the run and that "this enemy will be defeated", but he made clear that any reduction in US troop numbers would be based on conditions on the ground and the recommendation of military commanders.
He warned that withdrawing too quickly would undermine the recent success.
The response came from Hillary Clinton, who attended the address in Congress - wearing a red power suit and clapping occasionally - before sending out an e-mail to the media.
"President Bush isn't satisfied with failure after failure in Iraq; he wants to bind the next president to his failed strategy by unilaterally negotiating with the Iraqi government about the future of the US-Iraq security relationship, including the possibility of permanent US bases in Iraq," she said.
Towards the end of his speech, Mr Bush spoke for some time about what he described as the need to "change the conditions that breed resentment and allow extremists to prey on despair".
He said America was a force for hope in the world because "we are a compassionate people".
He called on Congress to double the initial commitment to fighting HIV/Aids by approving another $30bn over the next five years.
"To this day, Mr Bush's compassionate conservatism has never vanished completely [but he was] too distracted by war and foreign policy and too bored by the processes of government to know if the people working for him were following through on his proposals," wrote Jacob Weisberg, editor of the online political magazine Slate, in a Washington Post op-ed.
"The Compassionate Conservative will surely pay us a final visit tonight. He remains an appealing character but a largely fictional one, I wonder how the last seven years might have turned out if he had actually existed.
"In the last year of a failed presidency, I bet Mr Bush does too."