Such a pardon would be a generous Christmas gift to the Obama administration, which appears to want to avoid prosecutions. It would greatly disappoint a lot of Obama supporters, but these people could not blame Obama for pardons issued by Bush. At the same time, Bush would protect loyal administration officials. So a pardon would seem to be win-win, at least for the people who have power—who are about to have power or about to have had it.
Why does the Obama administration (appear to) want to avoid prosecutions? A number of possibilities, none of them very clear:
1. The legal cases are not strong, either as a matter of formal law or taking into account the likely response of a jury. Courts would need to convict low-level agents who argue that they received assurances that their actions were lawful and high-level officials who argue that their legal interpretations were made in good faith. Convictions in neither case are impossible but are likely to be difficult. Another difficult problem will arise over how confidential information, with possible national security implications, may be handled. And will a jury convict officials who violated the law because they believed that national security so required? Still, police who violate the law are often prosecuted; why not administration officials? At a minimum, one might argue, criminal investigations are necessary to get the facts straight.
2. The incentives for future lawyers and agents will be bad. Jack Goldsmith and others have argued that agents have become highly risk-averse, refusing to take actions that promote security because of the fear that the actions, even if lawful, will give rise to legal risk. The costs to suspects of investigation and trial are just too high, whereas the benefits of aggressive security-promoting actions are likely to be incremental, and tending to the good of society rather than the good of the agent. On this view, however, the real culprit is Congress, which insists on regulating national security agents rather than giving the president a free hand. Elsewhere Goldsmith has argued that the Bush administration should simply have asked Congress for authorization rather than broken the law, if that is what it did. On this view, Obama should prosecute Bush administration officials and just ask Congress to change the laws so that next time round, the president and his agents won't be constrained.
3. A trial would put the match to the powder keg of the culture wars and explode Obama's stated aspiration to lead in a bipartisan, middle-of-the-road way. The likely defendants are linked to powerful Republicans in Congress, in the courts, in the press, and elsewhere, and will appear as sympathetic figures to millions of Americans (remember Oliver North?). The Obama administration would risk appearing weak on national security as well as vindictive, and these are risks that are unlikely to be outweighed by realistic political gain. If trials result in acquittals (see #1) or minimal penalties, the prosecutions will themselves look like bad-faith, politically motivated efforts to humiliate political opponents over policy disagreements—indeed, this argument will be advanced by defense lawyers and likely find a home in the minds of some jurors. And if Obama subsequently seeks a freer hand from Congress in order to address some new security crisis (see #2), the effect will be multiplied tenfold. Trials that pit the government against its political opponents usually end badly for the government, if not with legal defeats then with pyrrhic victories that are political defeats. Meanwhile, Obama might worry that convictions would strengthen the hand of Congress in national security matters and weaken traditional executive-branch claims to priority in this area (#2, again). Does he really want such an outcome?
So Obama supporters should probably root for Bush to issue pardons. Bush might be just ornery enough to refuse.