The Economy: Good News for Dems, Right?

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By spotlighting the question of whether it's a good idea to allow the Bush tax cuts to expire or otherwise hike taxes for some taxpayers on capital gains, dividends, or other income at a time when the economy is weak, as both Hillary Clinton and Barack Obama have suggested, he adds, McCain has a potential opening to turn the economic debate to his benefit. "The core message from the Republicans will be that if you go after capital gains or dividends, the stock market and the economy will do even more poorly—that Democratic policies could make things even worse."

Republican pollster Frank Luntz also points out that McCain's anti-Washington image also may offer him more than the usual ability to distance himself from the Bush Administration's current economic record. "He's been so hostile to the Washington system that he has an opportunity most Republicans wouldn't have," says Luntz, who isn't aligned with any of the campaigns. If McCain can emphasize his record of fighting excessive government spending and out-of-control earmarks instead, that could allow him to build enough credibility on the economy to effectively change the debate from its recent poor performance for the GOP.

Looking for a Leader

Moreover, even as voters' economic worries are growing, Luntz argues that in that arena, as elsewhere, voters are looking less at specific issues and more at the candidates' leadership abilities in deciding whom to back. "They're not looking for a 10-point plan to fix the economy; they're looking for the leader who can best demonstrate the ability to resolve our economic anxieties," he says.

McCain also could simply get lucky: Washington is moving much faster than it typically has in the past to pump fresh cash into the economy in hopes of forestalling a recession. Thanks to the combination of the Federal Reserve's sharp interest rate cuts and the $150 billion tax rebate package now under negotiation in Congress, enormous amounts of liquidity could soon be sloshing through the economy and helping it to move out of the worst of the crunch by late summer or early fall. "Voters may appreciate and see those efforts by the time they get to the polls," says Goldman's McKelvey.

While he still believes the economy could be a tough hurdle for McCain to overcome, McKelvey offers a caveat: "It's hazardous to assume that because things aren't looking good now, they will look the same by the fall."

Sasseen is Washington bureau chief for BusinessWeek.