William Kristol suggests in the Weekly Standard that Bush needs to realize he has a "kick me" sign on his back and needs to fight back, by doing such things are pardoning Scooter Libby (the right thing to do, but politically impossible until December 2008). But I'm not as optimistic as Kristol. I think Bush is fatally crippled and doesn't have it in him to recover.
I watched a Military Channel doc on Midway a few nights ago, and it made clear that the reason that the US planes who got through the Zero-fighter defenses could wipe out the Japanese carriers so quickly was that the Japanese ships were poorly protected and did not have well-thought-through damage control. (The Japanese were also caught flat-footed at the worst-possible moment -- about to launch an attack, with all their planes, bombs, torpedoes and fuel on deck.)
Politically and intellectually, Bush is like a Japanese aircraft carrier. He's successful when times are good, but when he takes hits, he implodes. He is a poor public salesman as he cannot articulate his ideas in detail or with confidence. He has excellent instincts, generally the right values, and connects with people who want to connect with him. That's quite a lot, but it won't help in a damage-control environment.
But much more fundamentally, Bush simply disdains political argument. I said the following on this discussion thread a long time ago:
"I think (1) both Bush presidents (41 more so than 43 admittedly) have a patrician disdain for argument, seeing it as the equivalent of raising your voice in front of the servants; (2) both Bush presidents (here 43 is worse) are personally inarticulate and have a disdain for ideology and the divisions it necessarily creates ("I'm a uniter, not a divider"); and (3) Dubya thought nothing succeeds like success and victory its own justification and so, at the latest by the time of the arrest of Saddam Hussein, thought the political argument was over."That point was specifically about Iraq, but everything in it is relevant to the current context. I'd also add that Bush's political training was as Texas governor where the Democrats aren't exactly of the Conyers-Waters-Pelosi school. So he's bred this opinion of himself as not an ideologue. What I fear (actually I more than fear) is that he'll try to salvage his last two years with "bipartisanship," meaning cooperating with Ted Kennedy on an immigration amnesty bill that will make the Democrats the natural-majority-party for the foreseeable future.