So, will Bush pardon Libby? I think so.
Two instincts, I think, are in play here. The first is loyalty. Many of Libby's prominent defenders have tried to impress upon Bush's reputed sense of loyalty to his subordinates to press for a pardon:
“I hope it puts pressure on the president. He’s a man of pronounced loyalties and he should have loyalty to Scooter Libby,” said former Ambassador Richard Carlson, a member of Libby’s defense fund. “It would be a travesty for him to go off to prison. The president will take some heat for it. So what? He takes heat for everything.”
Bush's famous loyalty is not unlimited--while he expects unconditional support from his underlings, he has been willing to throw some of his people to the wolves if it would help him with his base (e.g., Harriet Miers). But nonetheless, the President has stood by many of his appointees and associates long after most administration's would have given them the heave-ho. Alberto Gonzalez and Donald Rumsfeld would be the most prominent names here, but there are others.
The second instinct, which I think conditions the first, is the President's vindicative attitude towards Democrats. If there is one governing principle of this administration, it is that he loves to stick it to the Democratic Party at every possible opportunity. It overrides his national security interest (e.g., Department of Homeland Security), it overrides his political interests (his targeting of friendly, moderate Democrats in the 2002 election)--whatever the situation, Bush loves to cause pain to the left. And with his poll numbers in the low 20s with no hope of resurrection, I believe this bitterness will only increase his lashing out.
That's what makes the pardon more likely than not. Bush cuts loose his subordinates only when they draw anger from his right flank. Libby's crimes are being trumpeted by the left. But Bush doesn't care about what the left thinks. Hell, at this point, he doesn't care what anybody thinks--the dead-end 25 percent who still supports him probably would still stand by him if al-Qaeda occupied New York. So what's to stop him? Bush revels in seeing impotent liberal rage. Now that the Democrats control Congress, that rage is not so impotent anymore. But a pardon is something they can't do anything about. Pardoning Libby gives Bush one last hit of the heady, early days. And that's why he'll do it.