McCain May Have Last Chance to Overcome Economy in Final Debate

By Hans Nichols

Oct. 15 (Bloomberg) -- Tonight's presidential debate presents Republican John McCain with perhaps his last chance to reverse the damage that the economic crisis, and his reaction to it, has caused his campaign.

A month after global markets were roiled by the Lehman Brothers Holdings Inc. bankruptcy filing, McCain and Barack Obama will meet for their third and final encounter.

Both presidential candidates have, in the last two days, offered new proposals on how they would restore confidence in the financial system and protect Americans' savings.

So far, according to a Bloomberg/Los Angeles Times poll, voters favor Obama's approach. Fifty-six percent of registered voters in the Oct. 10-13 survey said they were confident Obama had a plan to handle the crisis, while only 41 percent believe that McCain does.

Yesterday, McCain proposed $52.5 billion in tax cuts for retirees and investors and an expansion of deposit insurance for savings accounts, and he is expected to talk about his plan in tonight's debate at Hofstra University in Hempstead, New York.

The debate is McCain's ``only real opportunity to reach maybe 40 million voters,'' said Terry Madonna, the polling director at Franklin and Marshall College in Lancaster, Pennsylvania. The challenge for McCain is to give voters a ``sense of coherence about what he would do about the economy,'' he said.

Policy Proposals

Since Sept. 15, McCain, an Arizona senator, has offered more than a dozen specific policy and personnel proposals to address the financial crisis.

That day, McCain told an audience in Jacksonville, Florida, that the ``fundamentals of our economy are strong.'' Later in the day, McCain explained that by ``fundamentals'' he was referring to ``the American worker and their innovation, their entrepreneurship.''

Democrats pounced and Obama quickly incorporated McCain's line about ``fundamentals'' into his stump speech.

The next day, McCain called for a commission, modeled after the one that studied the Sept. 11 attacks, to investigate the causes of the market meltdown. He hasn't called for that since.

The same day, McCain said he opposed a government takeover of American International Group Inc., only to reverse himself 24 hours later, explaining that ``there were literally millions of people whose retirement, whose investments, whose insurance were at risk.''

Fed's `Core Business'

On Sept. 19, in a speech in Wisconsin to the Green Bay Chamber of Commerce, McCain proposed setting up what he called a Mortgage and Financial Institutions Trust.

In that same speech, he urged the Federal Reserve to return to ``its core business of responsibly managing our money supply and inflation.'' That became another admonition that he has not repeated.

McCain's current plan to order the secretary of the Treasury to spend $300 billion to buy mortgages directly from homeowners, which his campaign touted as a fresh debate-night announcement last week, was actually a repackaging of a proposal he unveiled eight days earlier, on Sept. 30.

He further refined that plan three days after the Oct. 7 debate, when he said that the ``funds aren't new.'' Campaign aides then confirmed that the money would be drawn only from the $700 billion financial-rescue package passed by Congress earlier in the month. The previous night, in an interview on ABC News, he had said that ``new money, if necessary'' would back the program.

``McCain has muddled his message by not only taking a new tack every couple of days, but announcing that he's taking a new tack every couple of days,'' said Jim Pinkerton, a Republican strategist.

Changing Situation

McCain aides, as well as the candidate, say he has calibrated his response to adjust to a changing situation.

McCain, 72, also has used calls for personnel changes to signal his policy beliefs, most notably when he demanded the resignation of Securities and Exchange Commission Chairman Chris Cox on Sept. 18 and three days later floating New York's Attorney General Andrew Cuomo, a Democrat, as a possible replacement.

The Cuomo suggestion, along with McCain's admission that he'd consider Democrat Warren Buffett as a possible Treasury secretary, caught some top McCain aides by surprise.

Mark Salter, a senior McCain adviser, tried to downplay any suggestion that McCain was seriously considering any names for his potential administration. ``He uses it as an occasion to talk about people whose experience and judgment he admires,'' Salter said.

Other Republican strategists, while pinning some blame on McCain, think he still has an opportunity to recover. ``There's no question that this economic storm has hurt McCain,'' said Scott Reed, presidential campaign manager for Senator Bob Dole in 1996. ``I think some of it is McCain's own doing.''

History suggests that McCain faces an uphill battle.

Running from behind in 1980, Ronald Reagan was the last, and only, presidential candidate to overcome a seven-point deficit with two weeks left in the election. In the last 20 days, Obama, 47, an Illinois senator, has solidified his lead in national polls over McCain. In this week's Bloomberg/Los Angeles Times poll, Obama holds a 9 point lead over McCain.

To contact the reporter on this story: Hans Nichols in Washington at hnichols2@bloomberg.net ;

Last Updated: October 15, 2008 00:01 EDT

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