Under the compromise, all combat forces would be pulled out of Iraq by Aug. 31, 2010, but a residual force of 35,000 to 50,000 troops would remain for training and support missions.
The Iraq withdrawals are crucial to the administration's plans to devote more military resources to Afghanistan, as well as to limit spending at a time when the government is facing record deficits.
Senior U.S. national security officials are nearing completion of a strategic review of the U.S. mission in Afghanistan, a step that Obama has described as an effort "to stabilize a deteriorating situation," one he has implied was neglected by Bush.
Seven years after the U.S. invasion, Afghanistan's stability is threatened by a renewed Taliban insurgency, as well as increasing frustration within the country with a central government regarded as corrupt and ineffective.
Last month, Obama announced plans to send 17,000 additional U.S. soldiers and Marines to Afghanistan -- deployments that would more than offset the troop reductions in Iraq.
Despite Sunday's bombing, U.S. military spokesman Maj. Gen. David Perkins said violence in Iraq had dropped to its lowest level since summer 2003, just months after the U.S.-led invasion.
Last month, 211 civilians were killed, including 60 during a major Shiite religious festival; 189 civilians and Iraqi security forces were killed in January, the lowest total since April 2003, when the initial ground war ended.
Even with the dramatic turnaround, bombings and assassinations still occur almost daily around the country, and Defense Ministry spokesman Mohammed Askari said it was impossible to fully stop the violence.
"Definitely the security situation is improving, but such terrorist thoughts are not easy to eliminate. There are breaches. They want to affect the situation," Askari told the Al Arabiya satellite news channel. He vowed that more precautions would be taken around recruiting centers, where large crowds are an appealing target for armed groups.
Haidar Nouri, 22, was one of the young men in line Sunday morning, waiting next to blast walls at the edge of Palestine Street, a main road adjacent to the Interior Ministry compound. Nouri, from east Baghdad's Baladiyat neighborhood, said he was desperate for work, tired of odd jobs and menial labor. Police divided his group into four lines, and the men thought they were about to go inside.
"While we were standing there, I heard someone scream, 'Stop! Stop!' Then I heard two shots and I felt something throw the crowd down. I felt nothing after that. [Then] I found myself in the hospital," Nouri said.
Shrapnel was lodged in his neck, hand and shoulder, and his thigh was burned, he said.
"I saw some of my fellow recruits lost their hands and others their legs. The hospital halls are crowded with the wounded," he said. "I hoped to serve my country when I got this job and that God would bless me with money, but this is what I got."
At the nearby Oil Ministry, employee Abbas Alaa said the force of the blast shook his building. "I got out and I was close to the incident site. We saw wounded people. I smelled burning flesh and saw pools of blood," he recounted. "The place was in total chaos."
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greg.miller@latimes.com
Times staff writers Saif Hameed and Raheem Salman in Baghdad contributed to this report.
