WASHINGTON — Still facing bloody challenges in Iraq, President Bush used his State of the Union message last night to plunge headlong into a divisive domestic issue: Social Security.

"Fixing Social Security permanently will require an open, candid review of the options," Bush said.

Some House Democrats hooted as Bush unveiled plans to allow Americans younger than age 55 to invest Social Security funds in financial markets — but held off discussing cuts in guaranteed benefits that will be needed to accommodate those personal accounts.

Two weeks after an inaugural address devoted to spreading freedom around the globe and forging an "ownership society" at home, Bush began attaching specifics to those ambitious goals. They included what are expected to become intensely contested details with long-term ramifications.

The 53-minute speech praised the U.S. military and said the administration "will continue to build coalitions that will defeat the dangers of our time."

He lauded recent elections in Iraq, Palestinian territories and Afghanistan as proof that freedom and democracy are spreading and that his aggressive, sometimes-controversial foreign policy is paying off. He said U.S. forces would remain in Iraq until the country is secure and called for $350 million in assistance to the Palestinians.

The evening also included a tear-filled, emotional hug between an Iraqi woman, Safia Taleb al-Suhail, who voted for the first time Sunday, and a Texas woman, Janet Norwood of Pflugerville, whose son died in Iraq. Standing beside her husband, William Norwood, the mother carried the dog tags of her son, Marine Sgt. Byron Norwood.

Bush introduced the couple and read from a letter he had received from Janet Norwood:

"When Byron was home the last time, I said that I wanted to protect him like I had since he was born. He just hugged me and said: 'You've done your job, Mom. Now it's my turn to protect you.' "

As Janet Norwood gripped her husband Bill's arm, her eyes misting over, the audience gave her a sustained ovation. Seconds later, al-Suhail, whose father had been killed by Saddam Hussein, hugged Janet Norwood.

As Bush offered a laundry list of agenda items — dominated by Social Security — Republicans stood, stomped and cheered. Without action, he warned, the retirement system is headed for bankruptcy.

While the president declared the state of the union to be "confident and strong," his nationally televised appearance before a joint session of Congress reflected another description — a house divided. Democrats, though outnumbered in the Republican-controlled Congress, stayed seated and silent through much of Bush's speech, although some audibly grumbled during Bush's analysis of Social Security's soundness.

In outlining his plan for personal accounts, Bush attempted to confront some potential political pitfalls.

For example, he said no changes would be applied to Americans born before 1950. Senior citizens groups are gearing up to oppose the Bush plan.

Bush also said investment options would be restricted in order to reduce individual financial risk, calling it a "nest egg" that can grow "at a greater rate than anything the current system can deliver."

He said other options "on the table" include raising the retirement age, changing benefits or discouraging early retirees from drawing checks. He emphasized that he has ruled out raising taxes.

Bush did not address how personal accounts would shore up Social Security's finances.

PAUL J. RICHARDS / AFP/GETTY IMAGES Safia Taleb al-Suhail of Iraq, with back to camera, hugs Janet Norwood of Texas, whose son was killed in Iraq last year. President Bush acknowledged them last night during his speech. Norwood's husband, William, right, shakes hands with Marine Staff Sgt. John Manuel Martinez.

Officials estimated transition costs of as much as $754 billion by 2015, a figure critics said would add to the already-bulging federal budget deficit and underestimated the actual amount.

Social Security is the linchpin of what Bush calls "an ownership society," a theme he struck in the inaugural address.

He also spent part of that speech vowing to promote freedom throughout the world, an idea he returned to in the State of the Union, referring to the Iraq elections over the weekend.

"We will succeed because the Iraqi people value their own liberty, as they showed the world last Sunday," Bush said. "Freedom in Iraq will make America safer for generations to come."

Bush's specially invited guests, sitting in the presidential box with first lady Laura Bush, included two first-time voters — one from Afghanistan, the other from Iraq.

As Bush introduced the two women, congressional Republicans waved index fingers that had been dipped in purple ink, just as Iraqis had before casting ballots.

Al-Suhail, the Iraqi voter, raised her index finger in response.

Overthrowing tyrannies in places such as Iraq and Afghanistan can help spread freedom across the Middle East and the rest of the world, Bush said.

Aides said Bush plans to stress diplomatic solutions to Iranian and North Korean nuclear programs. However, the president warned other nations anew against harboring terrorists, putting Syria on notice that he expects it to stop.

In softer tones, he urged two longtime allies to liberalize their repressive political systems. "The government of Saudi Arabia can demonstrate its leadership in the region by expanding the role of its people in determining their future," he said. "And the great and proud nation of Egypt, which showed the way toward peace in the Middle East, can now show the way toward democracy in the Middle East."

In ruling out specific timetables for the withdrawal of U.S. troops from Iraq, Bush said they would only encourage terrorists to hold out until the deadlines pass.

As with all State of the Union addresses, Bush used the occasion to lay out several initiatives.

They included spending restrictions to reduce the federal budget deficit, making first-term tax cuts permanent, restrictions on lawsuit damages, an energy bill that stresses new oil production, a simplified tax code and an anti-gang initiative Mrs. Bush is to lead.

The president also has called for looser immigration rules to accommodate guest workers — an item that has drawn opposition from fellow Republicans.

Bush also spoke of the culturally conservative values that he and many of his supporters embrace, endorsing the "culture of life" that opposes abortion. He called for prohibiting the creation of human embryos for medical experiments and for a constitutional amendment to protect traditional marriage.

The comments on Saudi Arabia and Egypt were reported by The Washington Post.