WASHINGTON (AP) – With federal deficits already running amok, it is unclear how President Bush will pay for his second-term agenda, a potentially multitrillion-dollar smorgasbord that includes overhauling Social Security and revamping the tax system.

Bush laid out lofty goals Thursday at his first news conference since his Election Day triumph. He said he wanted to buttress Social Security, simplify the tax system, strengthen the economy, fight terrorism, bolster education, and battle AIDS and poverty abroad.

“I earned capital in the campaign, political capital, and now I intend to spend it,” the president said.

But all the political capital in the world won’t pay for his pricey priorities. And unlike four years ago, when his first term began amid projections for $5.6 trillion in federal surpluses over the next decade, the budget’s future looks bleak.

Thanks to recession and the burden of higher spending and tax cuts that Bush won, the nonpartisan Congressional Budget Office now sees $2.3 trillion in accumulated deficits over the next 10 years. That excludes the costs of wars in Iraq and Afghanistan, easing the alternative minimum tax’s growing burden on middle-class families, and the long-term crunch retiring baby boomers will place on federal support programs like Medicare.

That leaves deficit hawks wondering how Bush would pay for his second-term wish list, finance the wars and meet his goal of halving federal shortfalls by 2009.

“I don’t think you can do all of that and still cut the deficit in half in five years,” said Robert Bixby, executive director of the bipartisan Concord Coalition, which favors deficit reduction.

Bush could decide to simply borrow the needed money, which would drive deficits higher, “and the real economic consequences of such a binge would come after he leaves office,” Bixby said.

For his second term, Bush envisions reshaping Social Security so workers can use some taxes they pay to support the system to create personal savings accounts. He has not advanced details or cost estimates, but some analysts have estimated the 10-year price tag at between $1 trillion and $2 trillion.

Bush wants to make 2001 and 2003 tax cuts permanent – they will otherwise expire by this decade’s end – at a roughly $1 trillion price tag. He said Thursday he wants to simplify the tax system at no net cost, but in the past such exercises have often resulted in tax cuts as part of the drive to get lawmakers’ votes.

It is hard to estimate the long-term costs of the Iraq and Afghanistan wars, but this year’s expenses alone may approach $100 billion. Domestic security costs several tens of billions annually, while his initiatives for education and foreign aid are relatively small, just a few billion a year.

White House budget office spokesman Chad Kolton said Thursday that Bush can still halve the deficit by 2009 while addressing his goals.

“These are national priorities that need to be addressed, long-term issues that would be more expensive to wait to deal with than to deal with now,” Kolton said.

Democrats dispute that.

“All he talked about today were things that will increase the deficit,” said Sen. Byron Dorgan, D-N.D. “He’s going to have to at some point confront reality.”

With the GOP’s electoral successes this week, Bush can count for support on Congress’ growing cadre of conservative Republicans – with some caveats.

Rep. Mike Pence, R-Ind., a leader of House conservatives, said a Social Security overhaul and tax simplification are central tenets of the conservative agenda.

But he added, “Restoring luster to our reputation as fiscal conservatives will be a very high priority for the Republican majority,” including “moving toward a balanced budget.”

To help achieve that, Pence said conservatives want to pare back part of the Medicare prescription drug benefits and avoid expanding the education revisions that Bush and GOP leaders have pushed through Congress.

Financial markets may also play a role in Bush’s second term. Despite two consecutive record federal deficits – last year’s was $413 billion – the markets have yet to show much concern and interest rates have stayed low.

“Realistically, a lot of these things turn out to be smaller than they sound,” said Ethan Harris, an economist at the brokerage firm Lehman Brothers. “Wall Street doesn’t get worried until it sees the details and the politics that’s there.”

But he and other analysts warned that while foreign investors and central banks have helped finance recent U.S. deficits, the risk that they will stop providing cash increases if large amounts of red ink remain consistent.