How do you restore a defendant's competence?
With drugs. A competent defendant must be able to understand the proceedings against him and to cooperate with his lawyer, according to the 1960 Supreme Court decision in Dusky v. United States. Two experts have diagnosed Loughner as a schizophrenic, a condition that can prevent a defendant from meeting these criteria. When a defendant is ordered into a treatment program, he may receive some education about the trial process and talk therapy, but anti-psychotic drugs are by far the most common and most effective treatment.
If Loughner refuses to take the drugs—which have quite a few severe side effects, such as muscle spasms and blurred vision—the government could try to force the issue. One way would be to show that an unmedicated Loughner is a safety risk to himself or other inmates. The Supreme Court has also allowed the government to medicate incompetent defendants against their will if the feds can demonstrate four things: a compelling reason for medicating, a good chance the drugs will work, proof that the drugs are necessary, and a lack of other options. Involuntary medication doesn't always mean the inmate receives forced injections or has pills shoved down his throat; often he'll simply agree to take the drugs after a court rules that he must.
Why does Loughner get four months to regain competency? Because that's about how long it takes for the drugs to improve psychotic symptoms. A bit more time might be useful: Studies find that around 75 percent of incompetent defendants are restored to competency within six months, but initial treatment periods in federal cases are limited by the U.S. Code to four. (Federal courts can extend treatment if it's showing promise. Most state courts allow for initial treatments of three to six months.) Defendants deemed to have no chance of regaining competence are supposed to be released or committed to a nonprison psychiatric ward. At that point, the government can decide whether to drop the charges or to keep them in place in case the patient regains competency. In high-stakes cases, though, the government can continue to treat the inmate for many years while the charges remain in place. Paranoid schizophrenic Russell Eugene Weston Jr., for instance, has been held at the Butner Federal Correctional Institution in North Carolina for more than a decade, as the government tries to render him fit to stand trial for the killing of two Capitol Police officers in 1998.