Bush also said he has asked newly installed Defense Secretary Robert Gates to report to him as quickly as possible on plans to enlarge the size of the Army and Marine Corps.
At a year-end news conference, Bush said the United States will "ask more of our Iraqi partners" in 2007, and he pledged to work with the new Democratic Congress, as well.
Bush sidestepped one question — whether he would order a so-called surge of troops in Iraq as a first-step toward gaining control of the violent and chaotic situation there. "Nice try," he told a reporter who asked about his plans.
The Baker-Hamilton Commission recommended a quick buildup of troops as part of an overall plan to arrest what it called a "grave and deteriorating" situation in Iraq.
Bush also said the United States supports the creation of a unity government in Iraq.
The president opened the question-and-answer session by conceding the obvious — things haven't gone well in Iraq, where the United States has lost more than 2,900 troops in almost four years of war, without quelling the insurgency.
"The enemies of liberty ... carried out a deliberate strategy to foment sectarian violence between Sunnis and Shia. And over the course of the year they had success," he said.
"Their success hurt our efforts to help the Iraqis rebuild their country. They set back reconciliation and kept Iraq's unity government and our coalition from establishing security and stability throughout the country."
Bush also explained a striking shift in position — his statement on Tuesday that the United States is neither winning nor losing in Iraq, contrasted with his insistence at a recent news conference that it was "absolutely winning."
He said his earlier comments were meant to say that, "I believe that we're going to win, I believe that ... My comments yesterday reflected the fact that we're not succeeding nearly as fast as I had wanted."