That's the hash war phase. It comes when the outlaw period fails. The States mines empty blocks, and the market fights back by increases fees to motivate more hashpower to come online and overpower the censor. It's a little more nuanced than that, but that's the general idea.

Bitcoin and the State (as we know it) can't both survive, especially the US. With suffient hashpower (of the levels that "Soft War" guy are advocating the Pentagon to acquire), mining empty blocks makes Bitcoin completely useless because transactions can't be put into blocks. The State has nuclear power plants and ASIC fabs (ask the NSA). This will not be an easy fight and it could go either way.