In a large bowl, combine ground beef & ground pork, mix well. Add rice, milk, egg, 2 tsp salt, 1 tsp chili powder, & mix well. Shape into 1 1/2 inch balls.

Heat vegetable oil in a large skillet over medium-high heat until hot. Cook the meatballs in batches in the hot oil until browned on all sides. Drain by putting them on paper towels on a plate.

In a large saucepan, combine tomatoes, 1 tsp salt, 1 tsp chili powder, water, garlic powder, & cayenne pepper. Mix well. Bring to a boil over high heat, stirring occasionally. Reduce heat to low.

Add meatballs to tomato mixture & mix well. Cover. Cook over low heat, stirring occasionally, for 1 hour.

Serve over hot cooked rice, if desired.