President Bush said Friday that he will do everything he can to ensure that as much money as possible from recent appropriations goes directly toward training and equipping the 2 million first responders on the state and local level.

The promise came as Democrats — and some Republicans — continued to argue with the president that the administration has not allotted enough money for homeland security.

"I proposed record funding for the first responders, $3.5 billion in the current budget. I've also requested another $3.5 billion in the 2004 budget. I signed the appropriations bill to make sure that we can finally begin to distribute funding to the states," Bush said. "I will continue to do everything in my power to direct as much of this funding as possible toward training and equipping police, firefighters and EMTs to prepare and respond to potential terrorist attacks."

The president, speaking to Cabinet officials and Homeland Security Department employees, said the administration is being thorough in its search for terrorists.

"Every member of this new department accepts an essential mission — to prevent another terrorist attack. Yours is a vital and important step in reorganizing the government to meet the threats of a new era as we continue to work to secure this country," Bush said.

Saturday marks another major milestone for the new department, which under legislation is required to have the bulk of federal employees folded into it by then. That's all or part of 22 federal agencies and 170,000 employees charged with patrolling America's borders, securing computer networks, checking for contamination of crops and spread of diseases and otherwise guarding against terrorism.

Only about a tenth of those workers operate out of the Washington area, and about 1,000 of them are working directly from the department's headquarters, located at least temporarily at a secure office complex run by the Navy.

The rest still operate in the ports, border stations and field offices from which they have always worked. Among the agencies moving to the new department are the Secret Service, Coast Guard, Immigration and Naturalization Service, Customs Service and the Transportation Security Administration.

The first-year budget is expected to be about $33 billion.

The administration's 15th Cabinet member, Homeland Security Director Tom Ridge, introduced the president. The two used this event to highlight what they see as major accomplishments for the new department.

Thursday, Ridge ordered the terror alert system reduced from orange to yellow. But administration officials warn there is still a significant risk of terrorist attack. Al Qaeda operatives have said they will wait to launch strikes when they believe the nation's guard is down.

Officials say they don't like to keep the nation on a heightened state of alert unnecessarily because that diminishes its significance.

The administration is considering the possibility that if the United States does go to war in Iraq and new intelligence suggests retaliatory strikes, it can raise the threat level once again.

The FBI has already discussed with terrorism task forces around the country how to protect the homeland in case of war. It has begun "outreach" efforts to Iraqi and Muslim groups, and is looking for homicide bombers and "lone wolf" types.

An FBI official said the bureau is "shocked" more homicide bombers haven't struck the United States. The FBI was tracking a few people who seemed like they could fit the homicide bomber profile, but have ruled them out.

The FBI has met with Israeli authorities to discuss how to spot a homicide bomber. The agency is also worried about potential terrorists using the Internet to recruit and communicate residents in the United States. The official described it as a "huge concern" at the bureau.

The FBI, CIA and other agencies are sharing the information they get with a new analytical unit set up at the new department to examine intelligence collected on possible terrorist plots.

The new department is also responsible for securing the borders with Canada and Mexico and 95,000 miles of shoreline and improving the trouble-plagued visa system to track foreigners as they come and go, as well as inspecting imports.

It will lead the government's response to the threat of chemical, biological or nuclear attack and begin an early warning system designed to detect smallpox, anthrax and other deadly germs.

Fox News' Catherine Herridge and the Associated Press contributed to this report.