U.S. President George W. Bush insisted on Monday he had plenty of unfinished business for his last year in office but he will leave some serious challenges for his successor in January, 2009.

In his State of the Union address, Bush focused on passing an economic stimulus plan and cutting wasteful spending. He barely touched on some parts of the world. North Korea, a member of his axis of evil in 2002, did not rate a mention.

The next president will need to chart a course for the Iraq war, navigate an increasingly tense relationship with Iran and grapple with political turbulence in countries such as Pakistan.

A worsening budget outlook, the expected lingering effects on the U.S. economy of mortgage and credit crises as well as the rising cost of health care are just a few of the domestic issues that will immediately confront Bush's successor.

The next president is going to face a daunting menu of issues both at home and abroad, said William Galston, a scholar at the Brookings Institution think tank.

Galston, a supporter of Democratic presidential candidate Sen. Hillary Clinton, said the United States was facing an arc of crises extending from Lebanon and the Palestinian territories through Iraq, Iran and Pakistan.

On a broader level, many critics of the Bush administration feel a major priority of the next president will be restoring America's world image after a battering over the Iraq war and detentions at Guantanamo Bay, Cuba.

None of these problems are of the kind where you could snap your fingers and fix them, said Bruce Buchanan, a political scientist at the University of Texas.

CHANGE

As Republican and Democratic candidates vie in the state-by-state contests to pick their party's presidential nominees for the November 4 election, change has emerged as the top theme.

Opposition to Bush's policies has been a rallying point for Democratic candidates including Clinton, Illinois Sen. Barack Obama and former North Carolina senator John Edwards.

All three have said they will begin pulling U.S. troops out of Iraq swiftly and reverse Bush's tax cuts for the wealthiest Americans.

Many of the Republican candidates have steered clear for the most part of criticizing Bush by name, preferring instead to invoke the legacy of party icon Ronald Reagan.

Political analysts said that was no surprise, given Bush's unpopularity and a growing unease, even among Republican voters, with the direction of the country.

Bush's approval rating is mired near 30 percent and opinion polls show that nearly seven in 10 Americans believe their country is on the wrong track.

Summing up his first seven years in office, Bush alluded in his speech to some of the controversies that have surrounded his presidency.

We have faced hard decisions about peace and war, rising competition in the world economy, and the health and welfare of our citizens, he said. These issues call for vigorous debate, and I think it's fair to say we've answered that call.

But he spent much of the hour discussing his priorities for the coming year.

In addition to calling on the Democratic-led Congress to quickly pass a $150 billion economic package he hammered out with congressional leaders, he also urged lawmakers to make permanent his 2001 and 2003 tax cuts.

He gave no ground to those calling for faster troop withdrawals from Iraq. Crediting his troop buildup in Iraq with reducing violence, Bush said withdrawing too quickly could undermine progress.

(Reporting by Caren Bohan; Editing by Patricia Wilson)

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