WASHINGTON - President George W. Bush on Tuesday in his first State of the Union speech urged Congress to enact an economic stimulus plan to help pull the U.S. economy from recession and return the over one million Americans who have lost their jobs back to work.

In his nationally televised speech from the House of Representatives chamber, Bush urged Congress to pass a fiscal stimulus package that would not only aid the unemployed but offer corporate tax breaks to spur job creation and help lead the country out of the recession it entered in March.

"The way out of this recession, the way to create jobs, is to grow the economy by encouraging investment in factories and equipment, and by speeding up tax relief so people have more money to spend," Bush said.

"For the sake of American workers, let's pass a stimulus package."

Responding to the president's call for action, House Democratic leader Richard Gephardt vowed to work on an economic plan with the White House and congressional Republicans.

"We need to find a way to respect each other, trust each other, and work together to solve the long-term challenges America faces," the Missouri lawmaker said in delivering the official Democratic reponse to the president's speech.

Offering few details, Bush said he supported extending unemployment benefits and direct assistance for health care coverage, but he emphasized that job creation would come from tax reform and improved foreign trade.

"Good jobs depend on sound tax policy," he said as he urged lawmakers to make permanent the $1.35-trillion, 10-year tax cut package enacted last year.

While laying out additional spending initiatives for the war on terrorism, increased homeland security and economic stimulus, Bush cautioned that the U.S. budget would run a deficit that will be "small and short-term" as long as Congress restrains spending.

After four consecutive years in which the U.S. government posted budget surpluses, both the White House and Congressional Budget Office have forecast a return deficits in the current and next fiscal years.

Some economists are now raising concerns that a fiscal stimulus package could do more harm than good.

"It may be counterproductive to increase those deficits so much that it begins to affect long-term interest rates," said Kurt Karl, chief economist at Swiss Re in New York.

Efforts to pass a package of measures to help stimulate the economy have been stalled for months over partisan bickering, with Democrats and Republicans blaming each other for the failure to enact a plan.

In his speech, Bush urged lawmakers to put partisanship aside.

"I am a proud member of my party -- yet as we act to win the war, protect our people, and create jobs in America, we must act first and foremost not as Republicans, not as Democrats, but as Americans," he said.

"I think this is a president that was sort of reaching out to Congress," said Anthony Chan, chief economist at Banc One Investment Advisors in Columbus, Ohio. "I really saw some seeds of compromise."

The White House has said a stimulus package is needed to ensure the recession-mired economy, which was hit hard by the Sept. 11 attacks, returns to full health quickly.

But recent reports showing an improving economy and comments from Federal Reserve Chairman Alan Greenspan last week that the economy was poised to recover even without a stimulus package have dimmed prospects for a broad stimulus bill.

Most economists now agree that the economy will recover without a stimulus package.

"President Bush reiterated the same message he gave us earlier on economic stimulus," said Sun Won Sohn, chief economist at Wells Fargo in Minneapolis. "I was hoping that he would acknowledge that economic conditions are considerably better than when he first proposed the economic stimulus package."

In his speech, Bush called on Congress to approach homeland security and the economy in "the same spirit of cooperation we have applied to our war on terrorism."

"Americans who have lost their jobs need our help and I support extending unemployment benefits, and direct assistance for health care coverage," he said.

Adding to his list of social reforms, the president urged Congress to enact a patient's bill of rights, a measure that would help uninsured workers get health care and beef up the Medicare system to include coverage for prescription drugs. Nampa-Reuters