President Bush's policy in the Iraq war, after the loss of 2,900 American troops and a price tag that may hit $1 trillion, is "not working," according to a bleak assessment offered by a bipartisan commission Wednesday. 

The Republican co-chairman of the Iraq Study Group, former secretary of state James Baker, said the existing options offer "no magic bullet" for success. But the panel urged the administration to pursue urgent diplomacy with Iraq's neighbors, including Iran and Syria, and seek withdrawal of most U.S. combat troops by 2008. 

Macomb County's two lawmakers, Reps. Candice Miller and Sander Levin, reached a rare consensus that the 10-member commission's 79 recommendations should be treated as a serious effort to change course in Iraq after nearly four years of war. 

"This provides us with an excellent opportunity to really evaluate our status in Iraq and choose the best options to go forward," said Miller, a Harrison Township Republican. 

"I think this is a pivotal point. We have to have a brutally realistic assessment of where we are, with the cost we're paying in American lives. I welcome the report. The study group has exercised due diligence and I hope people will accept it in a bipartisan spirit."

Levin agreed with Miller that it?s time for the Iraqis to "step up" and take responsibility for security and national reconciliation that could end the sectarian violence.

 "We're essentially saying to the Iraqis, 'Get with it. It's your country. We're not going to stay there forever,'" said Levin, a Royal Oak Democrat who represents most of Macomb County. "They ... have got to make up their mind whether they're a country or not."

The report warned that if the "grave and deteriorating" conditions in Iraq continue, there is a risk of a "slide toward chaos (that) could trigger the collapse of Iraq's government and a humanitarian catastrophe."

"Neighboring countries could intervene. ... The global standing of the United States could be diminished. Americans could become more polarized," the commission said. 

It recommended the U.S. reduce political, military or economic support for Iraq if the government in Baghdad cannot make substantial progress toward providing for its own security.

The 9-month study concluded that Bush should put aside misgivings and engage Syria, Iran and the leaders of insurgent forces in negotiations on Iraq's future, to begin by year's end.

On the highly emotional issue of troop withdrawals, the commission, formed by the Republican Congress, warned against either a precipitous pullback or an open-ended commitment to a large deployment. All combat troops not needed for "force protection" could begin to move out of Iraq by early 2008.

"Military priorities must change," the report said, toward a focus on training, equipping and advising Iraqi forces. "We should seek to complete the training and equipping mission by the end of the first quarter of 2008."

The commission recommended the number of U.S. troops embedded to train Iraqis should increase dramatically, from 3,000-4,000 currently to 10,000-20,000. Commission member William Perry, defense secretary in the Clinton administration, said those could be drawn from combat brigades already in Iraq.

In a slap at the Pentagon, the commission said there is significant underreporting of the actual level of violence in the country. It also faulted the U.S. intelligence effort, saying the government "still does not understand very well either the insurgency in Iraq or the role of the militias."

U.S. Sen. Carl Levin, incoming chairman of the Senate Armed Services Committee, said the report represented a welcome change in attitude about the war.

"This report ... represents another major blow at that 'stay the course' policy," said the Detroit Democrat. "It clearly and strongly supports changing the course in Iraq in a number of important ways."

Rep. Miller said she is leery of entering into diplomatic talks with Iranians and Syrians who have been accused of instigating the violence in Iraq. But she said she will maintain an "open mind" if the talks involve all of Iraq's neighbors.

"I look at that with great consternation," she said, "because I don?t think Iran and Syria can be trusted. They're sort of our sworn enemies."

Rep. Levin said he supports the report's call for "milestones" for the Iraqis to achieve if they want to avoid a precipitous drop in U.S. economic or military assistance.

"We've said all along that there has to be benchmarks," he said.

The commission recommended that a "diplomatic offensive" begin by Dec. 31 aimed at building an international consensus for stability in Iraq, and that it include every country in the region.

The United States accuses Syria and Iran of bankrolling terrorism and stirring up trouble in the region. The United States has had no diplomatic ties to Iran for nearly three decades, and pulled its ambassador from Syria last year.

Ahead of the report's release, the White House said it would consider talking to Iran and Syria if the commission recommended it.

Bush received the report in an early morning meeting at the White House with the commission members, then met with key lawmakers at mid-afternoon. "I want to work with people of both parties so that we can send a message to the American people that the struggle for freedom, the struggle for security, is not the purview of one party or the other," he said.

The commission also briefed members of the Iraqi government by teleconference, and one official there agreed that Iraqis must take responsibility for their own security. "Absolute dependence on foreign troops is not possible," said Deputy Prime Minister Barham Saleh.

The recommendations came at a pivotal time, with Bush under domestic pressure to change course and with the new, Democratic-controlled Congress certain to cast a skeptical look at administration policy.

Additionally, Defense Secretary Donald H. Rumsfeld, the architect of the administration's war policy, has resigned. His replacement, Robert Gates, was confirmed Wednesday by the Senate after a remarkable assessment of his own ? that the United States is not winning the war.

Baker, Hamilton and the other eight members of the commission said the status quo was unacceptable.

"Violence is increasing in scope and lethality. It is fed by a Sunni Arab insurgency, Shiite militias, death squads, al-Qaida and widespread criminality. Sectarian conflict is the principal challenge to stability," the report said.

-- AP contributed to this story. 

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