Posted By Reuters

President George W. Bush used his last State of the Union address on Monday to try to reassure Americans nervous about the faltering economy and to chart a course he hopes will help him stay relevant as he is eclipsed by the race to choose his successor.

Much of the reaction to Bush's speech centered on his $150 billion stimulus package, worked out with Congressional leaders and meant to avert recession in an economy suffering from high oil prices and a housing slump.

COMMENTARY:

SEN. EDWARD KENNEDY, DEMOCRAT OF MASSACHUSETTS DEMOCRAT

In just one month, over 200,000 families have lost their homes. The housing crisis is expected to lead to 2 million foreclosures in just the next two years. We need real solutions to help families keep their homes, but you didn't hear any tonight.

What you heard tonight was a president so desperate to cover up his five-year-long program of warrantless eavesdropping on Americans that he would throw out all of the lawsuits against the phone companies who cooperated in his illegal program.

THE NEW YORK TIMES, EDITORIAL

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.

MICHAEL PENTO, SENIOR MARKET STRATEGIST, DELTA GLOBAL ADVISORS IN HUNTINGTON BEACH, CALIFORNIA

I was kind of surprised, he acknowledged inflation was high and we have slowing growth. He talked about a stimulus plan, but what I wanted him to talk about is a permanent tax cut that is paid for. Employers won't hire if they know the stimulus is temporary.

It seems to me the Republicans have lost their higher moral ground in their support of balanced budgets. We're going to engender another bubble here because they're bailing out the consumer and they're bailing out banks. What the government is trying to do is repeal the business cycle."

HOUSE SPEAKER NANCY PELOSI, A CALIFORNIA DEMOCRAT AND

SENATE MAJORITY LEADER HARRY REID, A NEVADA DEMOCRAT

We will work with the President where possible-- to bolster the housing market and help Americans keep their homes, restore confidence in consumer goods like toys, food, and medicine, and to give our workers and employers more tools to compete in a global economy.

The President gave no hope for an end to the war in Iraq, approaching the five-year mark, with no political reconciliation, and too great a toll on our troops, our trust, and our treasury.

JOHN SWEENEY, PRESIDENT AFL-CIO

President Bush's rose-colored glasses need a new prescription - - he is blind to Americans' day-to-day economic realities and the truth about our nation's standing in the world.

TERENCE O'SULLIVAN, GENERAL PRESIDENT LABORERS' INTERNATIONAL UNION OF NORTH AMERICA

Quickly putting money in the pockets of consumers will provide a short-term, modest stimulus, but it will not create good jobs or meet our nation's needs in the way true investment can. We need comprehensive and sustainable economic stimulus that primes the economy, creates jobs and builds our country. One piece of that must be a commitment to rebuild America's crumbling infrastructure. For every billion dollars in federal infrastructure spending, 48,000 good jobs are created.

DAVID GILMORE, PARTNER AT FX ANALYTICS in ESSEX, CONNECTICUT

I don't think there's anything surprising here. Markets are focused on the impact of the fiscal policy and the best of the expectations of a sizable fiscal stimulus has already been discounted. I doubt there will be new positive news for financial markets from Washington policy. At the end of the day $150 billion plus or minus is not overwhelming. I think the stock market has priced in a lot of positive news from Fed easing and fiscal stimulus and one has to wonder if there's much Washington can do to avert a significant downturn. Fiscal stimulus is usually badly timed to the business cycle.

MATTHEW JOHNSON, SENIOR ECONOMIST AT ICAP, SYDNEY, AUSTRALIA

The speech is pretty much in line with expectations. It calls for tax cuts and perhaps looking at the support that the plan has, it could be passed quickly and cleanly. That should help the U.S. economy.

MARGO THORNING, CHIEF ECONOMIST AMERICAN COUNCIL FOR

CAPITAL FORMATION

A jump-start is necessary for the U.S. economy, but policymakers and presidential candidates should look long-term at making the current tax rates for individual capital gains and dividends permanent and maintaining personal income tax rates at present levels. Doing so would help remove unease about the economy's future, rebuild investor confidence and preserve a key component of the post-2001 recovery.

SEN. TOM COBURN, REPUBLICAN OF OKLAHOMA

Unfortunately, real spending restraint is not a popular topic on either side of Pennsylvania Avenue. Instead of talking about the actions we can take that could have a major impact on our long-term economic health, politicians overstate the impact of quick-fix methods like rebates. Spending decisions today do have a major impact far into the future.

SEN. KENT CONRAD, DEMOCRAT OF NORTH DAKOTA

The simple fact is that the state of the union has deteriorated on President Bush's watch. This deterioration is perhaps most clearly seen in our nation's fiscal condition. His policies have turned record surpluses into record deficits and debt. By the end of his administration, our national debt will exceed $10 trillion a staggering fiscal failure.

(Reporting by Joanne Allen and Emily Kaiser in Washington and Jennifer Coogan in New York, editing by Chris Wilson)