This Kurtz post at TPM, especially the e-mailed comments at the end, is crucial. Read it if you haven't. But the truth is that the administration has been pushing this line for a while. In December, remember that Dana Perino told the press that any contempt citations coming from congress would result in DOJ refusing to convene grand juries.
What did congress do? Nothing at all. So why on Earth would Bush change his tune now? It isn't more Democrats that we need in Congress. It's better ones.