With the election two weeks behind us, attention has shifted to what this administration plans to do in its second term. President Bush has specifically cited two major objectives: to make his tax cuts permanent, and to make significant changes in both the federal tax code and Social Security.

During his first term, Bush signed into law $1.9 trillion worth of tax cuts, to take place over a 10-year period. Many analysts cite these the tax cuts -- far more than increased domestic spending or the war on terror -- for the federal budget's dramatic shift from a significant surplus to a record high $413 billion deficit. If they are correct, making the tax cuts permanent could prove the biggest impediment to meeting the president's promise to cut the deficit in half over the next five years, a target that itself falls woefully short of solving the current fiscal crisis.

This shift is detailed in a report by the Center for American Progress. Another analysis by William G. Gale and Peter Orszag of the Tax Policy Center explains the relationship between fundamental tax reform and the proposed and enacted tax cuts.

Bush's other primary tax initiative is to overhaul and "simplify" the federal tax code. It is uncertain what the President will propose, although there is speculation that he will continue the trend to taxing wages, moving away from taxing investments. This will put greater burden on middle- and lower-income families that may not have the capital that wealthy families have. The administration may also propose to shift federal taxation away from income and more toward consumption. This would constitute a more regressive policy because it would increase the proportion of taxes paid by middle and lower income Americans, and reduce the proportion paid by those with higher incomes, who spend a smaller percentage of their income on consumption. Plans to overhaul the tax code would likely face great opposition, and it is unclear whether the president will pursue this "reform." A Washington Post article reported "many Republicans on Capitol Hill are worried about the political ramifications of overhauling the tax system." Pete du Pont, former Republican Governor of Delaware, said tax reform is difficult because "every group wants to protect what it has in the tax code."

The administration can also expect to face determined opposition if it pursues reforms to the Social Security system. While Bush has never been specific about his plans for Social Security, he has expressed interest in pursuing a plan to give workers the option of investing part of their Social Security payroll tax into private accounts. Rep. Robert Matsui (D-CA) echoed widespread skepticism for such a plan, saying, "privatizing Social Security will divert trillions of dollars from the trust funds and force significant benefit cuts." It is also likely such a proposal will increase the deficit unless additional revenue is raised or spending cuts are made.