A new intelligence report on Iran that says the country halted its nuclear weapons program four years ago provides "a warning signal" for the international community about the regime's continued danger, and will not change U.S. policy toward Tehran, President Bush said Tuesday.

The assessment came as Bush held a pre-holiday news conference that covered issues like the annual budget, funding for the War on Terror and ending the alternative minimum tax in addition to Iran.

"We know that they're still trying to learn how to enrich uranium. We know that enriching uranium is an important step in a country whose desire it was to develop a weapon. We know they had a program. We know the program was halted," Bush said at a news conference at the White House briefing room.

"I think it is very important for the international community to recognize the fact that if Iran were to develop the knowledge that they could transfer to a clandestine program, it would create a danger for the world," Bush said. "And so I view this report as a warning signal. ... It's a warning signal because they could restart it."

Democrats were quick with criticism of the White House in light of the new National Intelligence Estimate, with Democratic Congressional Campaign Committee Rep. Rahm Emanuel, D-Ill., saying it's just the latest instance of a White House reversal on foreign policy since the beginning of the Bush administration.

The new NIE means the U.S. no longer has to have a policy toward Iran that's based on both "hype and fear, but now can be clear eyed and hard-headed as it approaches the Iranians," said Emanuel, the No. 4 House Democrat.

"We do not have to operate from fear or weakness. We have strength here, and I think the NIE report shows that," Emanuel continued.

Bush said he believed the new NIE would be a useful tool in rallying the international community to continue putting pressure on Iran to prevent it from restarting its nuclear program.

"The best diplomacy, effective diplomacy, is one in which all options are on the table."

But Emanuel said the report shows a continuing failed policy in the Middle East, noting that the administration has just recently begun talking with Syria, abandoning earlier policy of not doing so; and pointing to the one-day peace talks last week in Annapolis, Md., as much-needed engagement in Israeli-Palestinian peace

"The last seven years in the Mideast by this administration have been the lost seven years, when you see on every front a reversal of what has been the central tenet of this administration," Emanuel said.

Senate Majority Leader Harry Reid also repeated much of the criticism of the president over remarks made at an Oct. 17 press conference in which Bush mentioned the words "World War III" when speaking about Iran.

President Bush's heated rhetoric on Iran, including comments about a potential World War III, is even more outrageous now that we know the intelligence community had informed him that it believes Iran had stopped its nuclear weapons program four years ago. This is the latest in a long line of inaccurate and misleading comments that got us into the Iraq war to begin with. They further diminish the credibility of a President with a dangerous record of overstating threats," said Reid, D-Nev.

But a clear reading of the president's statement shows that when asked point-blank if he "definitively" believes Iran is trying to build a nuclear weapon, not only did the president not reply with a definitive "yes," he spoke very carefully only about preventing Iran from gaining the knowledge of how to make a bomb.

"Until they suspend and/or make it clear that they — that their statements aren't real, yeah, I believe they want to have the capacity, the knowledge, in order to make a nuclear weapon. And I know it's in the world's interest to prevent them from doing so," Bush said at the time. "If Iran had a nuclear weapon, it would be a dangerous threat to world peace. But this — we got a leader in Iran who has announced that he wants to destroy Israel. So I've told people that if you're interested in avoiding World War III, it seems like you ought to be interested in preventing them from have the knowledge necessary to make a nuclear weapon."

Bush said Tuesday that that threat remains as long as centrifuge cascades used to enrich uranium continue to be installed, to spin and to have gas fed into them, as even the Iranians acknowledge to be the case.

Asked about his October remarks about "avoiding World War III," Bush said he was not aware of the information in the estimate when he made those comments, nor did he back down from the earlier statements. Bush added that the NIE has not changed his views on Iran, and he said U.S. policy will not change as a result of the report.

"I'm saying that I believed before the NIE that Iran was dangerous, and I believe after the NIE that Iran is dangerous. ... Our policy remains the same. I see a danger," Bush said.

"This report is not, 'OK, everybody needs to relax and quit' report. This is a report that says what has happened in the past could be repeated, and that the policies used to cause the regime to halt are effective policies," Bush said.

Budgets and Other Domestic Issues

Bush opened the press conference with a brief statement hammering Congress, except for a brief exception: a congratulatory note that the Senate was expected to take up and pass a trade agreement with Peru.

Bush continued — for the second day in a row, and the latest of several occasions over the past several weeks — to lash out against lawmakers on troop funding, the budget, the alternative minimum tax, and a pending bill dealing with terrorist surveillance.

Bush wants Congress to give him his full war-spending request — $196 billion for military operations in Iraq and Afghanistan — although Congress has tripped up on giving him $50 billion, a bill that failed due to GOP opposition after Democrats attached a withdrawal date as well as restrictions on interrogations.

Bush also called on lawmakers to pass the remaining 11 spending bills that have yet to cross his desk. He has only received one — the defense budget — but has threatened to veto most others because he says they are laden with lawmakers' special projects.

The alternative minimum tax also remains unchanged, something that must be done in the coming weeks or else millions more Americans could be subject to it. A tax that was originally designed to target only the super-rich, the AMT has gradually broadened its taxpayer base because the income level was never pegged to inflation.

And with the call to extend a foreign intelligence surveillance bill that expires in February, Bush said: "The holidays are approaching, and the clock is ticking for the United States Congress. Based on the record so far, Americans could be forgiven for thinking that Santa will have slipped down their chimney on Christmas Eve before Congress finishes its work. Let's hope they're wrong."

During the question-and-answer session, Bush also took time to vouch for a new economic initiative being developed by Treasury Secretary Henry Paulson to ease the subprime mortgage crisis.

While generally positive on the economy, Bush said, "I recognize there's some serious issues: the credit crunch, as well as the home-building industry. I am concerned about people who may — you know, may not be able to stay in their homes. That's of concern to me and our administration. And that's why we're taking the action we're taking."

Regarding Sunday's vote in Venezuela that handed President Hugo Chavez a loss in his quest to undo constitutional rules, Bush said: "The Venezuelan people rejected one-man rule. They voted for democracy," and called on a free-trade agreement with Colombia to bolster U.S. trade policy in South America.

Dismissing his role as "pundit-in-chief" on the 2008 presidential campaign, Bush still let loose a little commentary on the race.

"It's hard to believe that we're a month away from the Iowa caucuses, and it's going to get intense. And elections are intense. They're intense experiences. They're intense on both sides. It's the first time in a long time that both parties haven't had, you know, kind of a — a clear nominee. And it's going to be — it's going to be interesting to watch," he said.

The president even was a little nostalgic for his campaign experiences.

"I miss the campaigning. I like campaigning, you know. And if somebody ever says they don't like campaigning, they're not telling you — either that or they're a lousy candidate. I mean, it's fun.

"I enjoy it. I enjoy the crowds. I enjoy the noise. I enjoy giving that message. I enjoy the competition."

The president also expressed some hope that even in the waning months of his administration, he and Congress could work together — while poking Democrats in the rib.

"The Democrats in Congress, in the House and the Senate, need to work out their differences before they come to the White House. You can imagine what it's like to, you know, try to deal on an important piece of legislation and the Democrats in the House have one opinion and the Democrats in the Senate have another opinion. FISA's a good example," Bush said, referring to the Foreign Intelligence Surveillance Act bill that he wants renewed by February.

"The most disappointing thing about Washington has been the name calling. And, you know, this kind of — people go out in front of the mics and they just kind of unleash. And I've tried hard not to do that. I've tried to be respectful to all parties. ... I think we can get some things done," Bush said pointing to the Peru trade deal.

In his remarks, Emanuel also addressed the level of cooperation between 1600 Pennsylvania Ave. and Capitol Hill.

"I think if we did a little more cooperation, a little more compromise, and a lot less confrontation and a lot less complaining, you'll see a lot more things get done for the American people," Emanuel said, adding: "There should be a tonal shift from the White House."

War Spending Battle

The fight over funding the wars in Iraq and Afghanistan has become a rhetorical tug-of-war for leaders on national security and commitment to the troops.

"Our troops are waiting on Congress to fund them in their operations overseas. Nearly 10 months ago I submitted a detailed funding request. Congress has not acted. Our men and women shouldn't have to wait any longer," Bush said, opening his remarks Tuesday.

Later, he said, Congress "needs to fund them (combat troops) without telling our military how to conduct this war. You know, arbitrary dates for withdrawal are unacceptable, particularly given the fact that the strategy is working. It's working. And it seems like to me that this Congress ought to be congratulating our military commanders and our troops.

"And one way to send a congratulatory message is to give them the funds they need. And now is the time to do it."

But Emanuel signaled no new intention on behalf of Democrats to change their stance, which is to try to push through the Senate the House-passed version of the latest bill — the $50 billion bill with the December 2008 withdrawal date and the interrogation restrictions. The plan isn't likely to succeed, however, because the Senate already tried once to pass the bill, but it failed 53-45, falling seven votes short of the 60 needed to overcome procedural hurdles.

Emanuel praised troops for doing a "fabulous" job in Iraq, but faulted the administration for not providing the tools for Iraq to come to a political solution as well as a military one.

"At every step of the way, our troops have been successful," he said, but "four and a half years later, we still don't have a political, diplomatic strategy."

"Our role here in Congress is to — because nobody else will do it here in Washington — is to pressure the Iraqis to stand up and take account for Iraq and know that the American people will not have an open-wallet commitment to that country if they're not going to have a strategy for taking control of the country," Emanuel added.

On Monday Reid suggested that a compromise could be possible on funding the troops if Democrats get some of their domestic spending programs funded, but Reid's spokesman later told FOX News that Reid won't compromise on conditions for removing troops from Iraq.

According to Pentagon spokesman Bryan Whitman, operations in Afghanistan and Iraq are currently unfunded. The Defense Department has reprogrammed all the money in its annual defense budget that can be shifted to the War on Terror.

"We are mortgaged to the hilt," Whitman said, noting that the Army is spending down its operations and maintenance account, which is expected to go dry for in mid February. The Marines are doing the same, he said, spending down their operations and maintenance account. It run out by mid March.

At that time, Whitman said, "Base operations come to a grinding halt."

Defense Secretary Robert Gates has warned that if the funding doesn't come, civilian employees and contractors will be furloughed. According to union agreements with the Defense Department, the Pentagon must alert any contractors who will be potentially furloughed 60 days before the furlough goes into effect. That means if the Army runs out of money in mid February, those furloughs have to be sent out by the Pentagon in mid-December. As many as 200,000 civilian employees and contractors are expected to be affected, Gates has said.

Despite the dire funding scenarios, Democratic Party leaders are hoping to change the public message to blame Bush for failing to provide money needed by the troops by refusing the $50 million offer.

"Democrats want to work with the president, yet he continues to engage in the same tired rhetoric that does not serve the best interests of the American people," said House Speaker Nancy Pelosi, D-Calif.

The standoff between Bush and the Democrats is largely on principal, as the Democratic bill would likely have little to no practical effect on force levels in Iraq.

The measure orders that troops start coming home in 30 days — a requirement that Bush is already on track to meet as he begins reversing this year's troop buildup in Iraq. And the 2008 goal to have most troops home is a nonbinding goal, which means Bush could ignore it.

FOX News' Mike Emanuel and Jennifer Griffin and The Associated Press contributed to this report.