WASHINGTON -- President Bush used his first post-victory news conference yesterday to sketch out an activist agenda for his second term, saying American voters have given him the wherewithal to push ahead with his priorities.

	Charles Dharapak, Associated Press President Bush speaks to reporters at his first news conference yesterday following his re-election. Click photo for larger image.

"I earned capital in the campaign, political capital, and now I intend to spend it," he said.

Taking questions for 45 minutes from reporters , Bush joked that he was including the press corps in his effort to reach out to all Americans after a divisive presidential race. He insisted he was prepared to tackle tough issues such as rejiggering Social Security to preserve it, revamping the "complicated and outdated" tax code and fighting terrorism around the globe.

The president hinted that an all-out military offensive against insurgents who are in control of the Iraqi city of Fallujah was in the offing. "In order for Iraq to be a free country, those who are trying to stop the elections and stop a free society from emerging must be defeated," he said.

He would not talk about whether he intends to increase troop strength in Iraq, which was sharply debated during the campaign, but said there will be 125,000 Iraqi troops trained to guard their country by the time Iraqi elections are held in January. Nor would he say how much more money he intends to seek to finance the conflict and the rebuilding of Iraq. There have been reports he intends to ask for at least $70 billion more on top of the $87 billion he received earlier this year from Congress.

After meeting earlier with his Cabinet, Bush said that there will some changes in that inner circle but that he has made no decisions yet. Speculation has centered on Attorney General John Ashcroft, Homeland Security Secretary Tom Ridge and Secretary of State Colin Powell as three of the most visible members of his team likely to depart for private sector jobs. Bush said he will start thinking about Cabinet changes this weekend at Camp David.

It has become traditional in a second term for officials in high positions to submit automatic letters of resignation to the president, who may or may not accept them. It's not clear that Bush will do that, but he warned his Cabinet that the post-election period is a season of wild speculation on who will stay and who will go.

In a burst of candor, he said it was not true that he prefers to surround himself with like-minded aides. He said that it is important to have advice from those who are not cowed by the Oval Office.

Otherwise, he said, people visiting him are "getting ready to come in and tell me what for and they walk in and get overwhelmed by the atmosphere, and they say, 'Man, you're looking pretty.' And therefore you need people to walk in on those days when you're not looking so good and say, 'You're not looking so good, Mr. President.' "

The president ducked questions about whether he was preparing to nominate anyone to the Supreme Court in light of Chief Justice William Rehnquist's current battle with cancer and whether he would make opposition to abortion a factor. He said that when he nominates judges he does so on the basis of qualifications, knowledge of the law and a judicial temperament he finds agreeable.

Bush made clear that with the help of a Republican-led Congress fortified with more GOP senators and representatives, he intends to pursue a vigorous legislative agenda.

In his victory speech Wednesday Bush said his goals were to boost the economy, reform the tax code, strengthen Social Security, improve schools, uphold the deepest values of family and faith, help Iraq and Afghanistan defend their freedom and work with "good allies at our side" to fight the war on terrorism.

Bush was asked yesterday about the possibility of restoring unity to the sharply divided country after the election. He said that he worked with Democrats when he came to Washington in 2001 and was "fully prepared to work with both Republican, Democrat leadership to advance an agenda that I think makes a big difference for the country."

He said, "One of the disappointments of being here in Washington is how bitter this town can become and how divisive. I'm not blaming one party or the other. It's just the reality of Washington, D.C., sometimes exacerbated by you [the media], because it's great sport. It's really, it's entertaining for some. It also makes it difficult to govern at times."

Bush cited the No Child Left Behind Act as an example of bipartisanship, although some Democrats who voted for it have since disavowed it, saying the president has not requested enough funding for it to make it work. Some Republicans don't like it because it puts the federal government more into the state arena of overseeing education.

With some Americans concerned about how he will govern in a second term when evangelical Christians were a large reason for his victory, Bush said: "My answer to people is I will be your president regardless of your faith, and I don't expect you to agree with me, necessarily, on religion. As a matter of fact, no president should ever try to impose religion on our society. The great tradition of America is one where people can worship the way they want to worship. And if they choose not to worship, you're just as patriotic as your neighbor."

Asked about the growing budget deficit, he said he would like to revive the so-called line-item veto. He also said the key to controlling the deficit was to have "spending discipline" and an effort to "grow the economy."

He added, "As the economy grows, there will be more revenues coming into the Treasury. That's what you have seen recently. If you notice, there's been some write-downs of the budget deficit. In other words, the deficit is less than we thought because the revenues is exceeding projections.... The revenues ARE exceeding projections. Sometimes I mangle the English language, I get that."

Bush said that he has been "wisened to the ways of Washington. I watched what can happen during certain parts of the cycle, where politics gets in the way of good policy. And at that point in time I'll continue, you know, I'll try to get this done, try to get our bills passed in a way, because results really do matter as far as I'm concerned. I really didn't come here to hold the office, just to say, 'Gosh, it was fun to serve.' I came here to get some things done. And we're doing it."