Bush's Agenda for Second Term

On the campaign trail, President Bush promised a bold domestic agenda, a commitment he reiterated Wednesday, starting with a pledge to keep taxes low.

"We'll continue our economic progress," Bush said during his victory speech. "We'll reform our outdated tax code. We'll strengthen Social Security for the next generation. We'll make public schools all they can be."

But Bush may have to move quickly, while he is at his most powerful.

"Second terms are often difficult times for presidents," said John Fortier of the American Enterprise Institute. "The beginning of a second term is really his chance to do something if he wants to use the fairly decisive win that he had on Tuesday."

Bush will use his political capital on issues he cares the most about: making his tax cuts permanent, simplifying tax returns, curbing expensive lawsuits and giving young people the chance to put payroll taxes into private retirement accounts -- a plan that could cost $2 trillion over 10 years. Bush has not said how he would pay for it.

Despite his victory at the polls, Bush may have to compromise. Senate Democrats still have the power to delay any part of the Bush agenda.

The most brutal fight could come over Supreme Court appointments.

Chief Justice William Rehnquist's recent diagnosis of thyroid cancer is a sharp reminder that Bush could nominate as many as three justices. Social conservatives, who were so important to his re-election, will likely demand socially conservative nominees.

"That could be very important for issues like same-sex marriage, religious liberty, the sanctity of life and other things that motivated millions of voters this week," said conservative activist Gary Bauer.

Bush has promised he will reduce spending and the bloated budget deficit. To do that, however, he will need to take on Congress. Thus far, he has never vetoed a spending bill.

Plan for Iraq

The presidential election, however, changed nothing on the ground in Iraq. While the votes were still being counted, another U.S. soldier was killed by a roadside bomb. With Bush's second term guaranteed, it will now be up to him to finish the war he began.

Major changes in strategy are not expected.

"We are not going to be making different decisions -- that's very important, that sort of continuity," said Bush foreign policy adviser Danielle Pletka. "But it's not necessarily going to mean that one battle is fought a different way."

That is especially true in Fallujah, where U.S. Marines are planning a major assault. As they watched the election returns Tuesday night, many voiced support for Bush.

"We all believe in the unity of command," said one Marine, "and it's my feeling that it's kind of like taking the All-Star quarterback out of the big game."

Fallujah has been entirely under the control of insurgents since April, when a decision was made to pull back the Marines who were prepared to take the town.

Lt. Gen. John Sattler, the commander of the First Marine Expeditionary Force, said in a recent interview with ABC News that he is now waiting for permission from interim Iraqi Prime Minister Iyad Allawi to launch an attack.

"We would be prepared to go in side by side with the Iraqi security forces," he said. "We will support them in any way the prime minister wants us to support them."

There is great fear, however, about backlash. In any assault, innocent civilians can be killed, and it would breed even more enemies if it were to happen in Fallujah.

"The insurgents themselves -- particularly the Iraqi insurgents -- are regenerating, and that is a sobering thing for us all," said retired Army Gen. Jack Keane, an ABC News consultant.

U.S. troops have been battling insurgents in Fallujah for more than 18 months. If the insurgents cannot be defeated, Bush will have a difficult time reducing the number of American troops in the near future.

ABC News' John Cochran and Martha Raddatz filed this report for World News Tonight.

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