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None of the setbacks of the last year or two have discouraged the Bush team. They seem intent on pushing forward in every area until they're stopped. Most of the media and many of the Democrats will remain complicit, or will protest moderately and wishfully.
McConnell's brazen post-Comey piece was a clear indication that this is true in the civil liberties area. Even worse are recent indications here and there that a.) work is steadily continuing on infrastructure for a major permanent presence in Iraq, including the largest embassy in the world, which will presumably serve as the base for the occupation of the whole Middle East, and b.) indications that the Bush team's Plan B for Iraq is an attack on Iran.
I've always thought that Bush has borrowed Ariel Sharon's "facts on the ground" strategy, which basically means fucking things up so badly that your domestic opponents' proposals become moot, and only a version of your policy makes any sense any more. Presumably if there's an attack on Iran a crisis will be cooked up first, and the intimidation of opponents is presumably already being organized.
I tend toward pessimism and I've been wrong in the past (thank God!) But I still believe that Bush will only stop if he's forced to by very determined opponents within and without government. There's really no room at all for negotiation, bipartisanship, or compromise. I don't think that the Democrats have quite learned that yet.