Suppose Bush were to decide that a confirmation fight (or even just a hearing) over Gonzales's successor would be too painful, and a recess appointment too controversial. Does he have to nominate anyone? Or can he go through the rest of his Administration with Solicitor General Clement as an interim AG? Are there any powers that a confirmed Attorney General has that an interim Attorney General doesn't? Are there any steps that the Senate or anyone else can take in the event of that eventuality?
As far as I know, an acting Attorney General has all the powers of a confirmed Attorney General; the difference is political, not legal.
Although there is no way that Congress can force the President to exercise his appointment power, I suppose it would be possible for Congress to condition the exercise certain powers of the Attorney General on there being a confirmed holder of the office. I don't think it would be good policy — in fact I think it would be very bad policy to leave the country unable to do things that need doing — but offhand I can't see a constitutional obstacle to such a statute.
There is also a very weird Constitutional argument that might be brought into play but I think it would —- and should — fail. But here it is anyway:
The Solicitor General is appointed by the President by and with the consent of the Senate, as is the Attorney General. But under Article II, Section 2, paragraph two of the Constitution, there are (at least) two kinds of major Presidential appointees: “Officers of the United States” and “Inferior Officers”. The full “Officers” require Senate confirmation; Congress can waive the confirmation requirement for the “inferior” kind. If Senate confirmation has been waived, then only the President, or courts, or “Heads of Department” (usually understood to mean Officers) can appoint “inferior officers”. Let's assume that the Attorney General appoints an “inferior officer” who then makes a decision altering the rights, duties, or responsibilities of someone willing to sue (thus solving the standing issue).
The aggrieved person could argue that the Solicitor General is only a mere “inferior officer” himself — one for whom, as it happened, Congress had not waived the confirmation requirement, but for whom it could if it so chose. If this were correct, any “inferior officer” appointed by the acting Attorney General (himself an inferior officer) held that office illegally and his decisions are null and void.
But is this a good argument? I'm somewhat dubious.
First, one would have to argue that even if the Solicitor General were an inferior officer ordinarily, his being the acting Head of Department didn't give him the necessary appointing power for constitutional purposes by virtue of his acting status. This part of the argument takes us to unchartered waters. Some formalists would argue that a department head is a department head. Other formalists would argue that status comes at the time of appointment. A structuralist would worry that if the President could place non-officers into officer positions in this manner it would undermine the separation of powers. Traditionalists might say that we've often let acting officials run things, and we should be mindful of the need to have a working government would likely carry the day. Being a structuralist at heart, I think the argument here isn't bad — but it all depends on the Solicitor General being “inferior” in the first place.
And this second part of the argument seems much more doubtful. One would also have to convince a court that the Solicitor General wasn't an “officer of the United States” in his own right. That's far from obvious.
There is no bright line between the two types of appointees. We do know that Cabinet officers like the Attorney General are unquestionably “Officers” and that the Special Prosecutor under the now-lapsed statute authorizing them was — barely — an “inferior officer”.
The argument that the Solicitor General is only “inferior,” relies on the facts that he reports to the AG, and is actually the number four official in the DoJ pecking order. No court has ever held that reporting to someone rather than directly to the President is a necessary element of “officerness” but then again no court has ever held otherwise, so the argument remains open. Plus, since the Attorney General is only #4, calling him an “officer” would suggest very strongly that there are four “officers” in the DoJ, and several in every other cabinet department as well; that sounds like a lot.
But given the long history and tradition of the office of Solicitor General, I don't think most courts would find it very difficult to say that the Solicitor General was an “officer”. The Solicitor General has important powers and responsibilities over litigation, including the power to “confess judgment” — throw in the towel on appeal before the Supreme Court for a case the government won below. The office of Solicitor General dates back to 1870, and has a long and generally admirable tradition of independence, so much so that the Solicitor General is sometimes called the “tenth Justice”. I think the Solicitor General is probably an “officer” in his own right, and regardless of what I think, I'm pretty sure most courts and Justices would see it that way.
In short, no, I think there's no legal reason the Solicitor General can't be acting Attorney General for a long, long time. Even so, I predict that the he won't be.