Nails in McCain's Coffin?

Normally electoral vote tides take weeks and months to form and impact a campaign. Ten days ago the financial crisis wave rose quickly and swamped this presidential campaign. It is the only thing anyone is talking about; it has received saturation media coverage (and, as we write this, the Asian and European markets are down significantly). And it may be the final nail in the coffin for John McCain.

Up until the financial crisis, the McCain campaign had been doing a remarkable job of staying close (and even, briefly, pulling ahead) in a campaign that it has no real business winning when you consider the environment. But with a sinking economy piled on top of everything else, even a perfect campaign might not be enough.

Which brings us to the debate. Both men were terrific (kudos, too, to Jim Lehrer for staying out of the way and basically letting the two candidates go at it), so we'll call it a draw. But in many respects it doesn't matter what McCain does or says during these debates; all eyes are on Obama. We've said it many times: if Obama can prove himself to be a credible commander-in-chief (not an easy task, mind you), he'll win. And he did that on Friday night. He was poised and direct, much better than he was during his primary debates or during the two recent forums at Saddleback and Columbia University. His performance, combined with the financial crisis, makes it likely that he will win this election.

Today, the LCG regression vote model projects McCain losing by 2.2 points in November. He currently trails by 2.3 points. In many of those national and key state polls, Obama has taken a three-eight point lead; he obviously has momentum. McCain's recent vote strength is still checking the more recent bounce that Obama got from the fiscal crisis (and we haven't seen an impact from his debate performance yet), which is preventing the model from giving Obama any momentum beyond his current advantage. Put another way, because McCain has (recently) proven himself to be a strong and credible candidate, the model needs more evidence that Obama's "fiscal crisis"/debate bounce is genuine before it projects him as a bigger winner.

What the regression does show is that the financial crisis has all but eliminated the GOP Convention/Palin pick bounce that McCain enjoyed. We have reverted to the early-August Obama lead. Undecided and "soft" voters have drifted back into the Obama column. And as many other pollsters have noted, Obama has re-taken a solid lead with Independents. There is a direct relationship between this and the collapse of the Palin/Maverick narrative--and this began way before the Couric interview. Thursday's debate will be an opportunity for the McCain campaign to re-engage with some of those voters, but Palin will have to have a strong night (see #4 below). Having said all of the above, there are still five weeks to go (a lifetime in political campaigns), so anything can happen. But the next few weeks (and debates) will be critical for the McCain campaign as it works to change the current narrative.

Up-to-the-Minute Analysis of the Environment

1. McCain's gambit last week may yet pay off. The President spoke at 7:30 a.m. this morning. It is likely that the House will vote today to pass the amended version of the Administration's $700 billion plan. As it stands at 9:30 a.m. this morning, it appears that taxpayer protections have been built into the plan. It remains to be seen if McCain's interventionist actions taken last week will be seen as a political asset or a liability, but this morning's activities have improved his odds.

• McCain was about as good as he can be. Our sense is that this might have been the best debate performance of the year for both candidates. McCain in particular seemed to steer the debate to talking points that best supported his candidacy (spending, earmarks, troop surge in Iraq).

LCG Electoral Vote Map

Below is our updated map. Obama's lead is widening basically everywhere, except PA and FL. He continues to maintain a lead in solid electoral votes.

• New Mexico from toss-up to Obama

New Mexico is extremely problematic for Team McCain. While McCain appeared to have closed the gap in late July and early August, it now appears that Obama has opened up a seven-point lead based on an average of the last three state-wide polls. While it is unlikely that New Mexico will be decisive on November 4th, peeling away states like New Mexico could allow Obama to get to 270 electoral votes while winning only two of the heavyweight toss-ups of Ohio, Michigan, Virginia and Florida. The trend has to be disconcerting.