The Note: Econ 102

Oct. 14, 2008— -- So the Dow won its points back -- where does Sen. John McCain go to get HIS points back?

He's a day late, and $7.5 billion short (as measured by price tags). After realizing that it's all about the economy -- then seemingly forgetting it -- and after saying he would unveil new economic proposals -- then saying he wouldn't -- Team McCain on Tuesday turns the page back, again, to the only issue that's likely to really matter between now and Election Day.

Maybe Sen. Barack Obama really IS right where McCain wants him. (But maybe, since he spent Monday in Virginia and North Carolina, McCain was where Obama wanted HIM).

Assuming McCain, R-Ariz., hasn't precisely been where he wanted to be, this may be his way only way back -- with only a few detours, as arranged by Bill Ayers. His next step comes on a day where investors look to breathe again -- as he hopes that the public takes one more deep breath before Election Day.

From the McCain campaign Tuesday morning: "John McCain will address the ongoing economic crisis, with a special emphasis on those most badly hurt: workers, homeowners, savers, and seniors. He will announce specific proposals to build on his Resurgence Plan, which uses the $700 billion to keep Americans in their homes, stop the drop in housing values, stabilize financial markets and turn the corner on the crisis by charting New Directions for Workers, Seniors, and Savers. Unlike Barack Obama, John McCain understands that in a crisis raising taxes is an especially bad idea."

The details, per Reuters' Steve Holland: "McCain will propose that seniors pay a maximum tax rate of 10 percent on money they withdraw from IRAs and 401(k) retirement plans in 2009 and 2010, instead of paying the current higher tax rate."

"[Doug] Holtz-Eakin said McCain will also propose relief for Americans who are 'aiming toward retirement' and were counting on investment income to send their children to college or pay the mortgage. Internal Revenue Service rules say Americans can only deduct $3,000 in stock losses in any given year. McCain would expand that deduction to $15,000 a year for the tax years 2008 and 2009."

"We've got help at all levels of society, not just at one," former mayor Rudy Giuliani, R-N.Y., told ABC's Robin Roberts on "Good Morning America" Tuesday.

As for the shift in campaign tone: "They have great disagreements -- a lot of respect for each other -- but real disagreements," Giuliani said. "My advice to him is that he just has to get his message out."

The biggest thing going in McCain's favor is also his biggest enemy: time. There's not enough of it left to force a major shift in the race -- but there's just enough of it to cram in another storyline or two. And that demands more than one candidate.

The New York Times' Adam Nagourney: "Campaigns have rhythms, and inevitably swing back and forth for all kinds of reasons, including mistakes by candidates (think Senator Hillary Rodham Clinton and driver's licenses for illegal immigrants) and the news media's desire for a competitive race and tendency to find the 'underdog is surging' story line irresistible. The pendulum theory is certainly one that Republicans are grabbing onto these days."

There is time for another shift in scrutiny: "McCain is the focus because what was thought to be a close race doesn't look like one at this moment. Which is all the more reason that the real focus now ought to be on Barack Obama," Dan Balz writes in The Washington Post. "The presidential race is not over, but at this point, Obama has a better chance of becoming president than McCain, and as a result, the questions ought to be going toward him as much or more than McCain -- questions not of tactics but of substance."

(While we're shifting focus here -- why couldn't McCain's proposal have come Monday? What does it say about order and disorder in the campaign that the new plans were a go and then a no? What does it say that McCain was looking forward to asking questions at Cape Fear Community College but then didn't answer a single one?)

A hopeful sign for McCain, if you look hard enough (and why not look hard for such things, given the state of the race?): "Neither President Bush nor the two men vying to succeed him, John McCain and Barack Obama, has won the confidence of a majority of Americans that he and his advisers will be able to 'fix' the nation's economic crisis, according to a USA TODAY/Gallup Poll," USA Today's Susan Page writes.

It's Obama up 51-44 in the national numbers, but this qualifies as an opening: "Despite his lead, 50% of Americans say they don't have confidence in Obama and his advisers to fix the economy; 44% do. Even so, that lukewarm endorsement is better than the 31%-63% rating for McCain," Page writes.

But McCain is tasked with making up ground approximately everywhere. New battleground state polls out Tuesday morning from Quinnipiac University:

COLORADO: Obama 52, McCain 43

MICHIGAN: Obama 54, McCain 38

MINNESOTA: Obama 51, McCain 40

WISCONSIN: Obama 54, McCain 37

Says pollster Peter Brown: "The only possible bright spot for Sen. McCain -- and you would need Mary Poppins to find it in these numbers -- is that he is holding roughly the same portion of the Republican vote."

New allies for Obama, for better and/or worse: "The Illinois senator's increasingly confident campaign is also strengthening coordination with congressional Democrats on an economic agenda that could be ready before the next president takes office," The Wall Street Journal's Jonathan Weisman and Greg Hitt report.

"Obama aides and congressional leaders are discussing an economic package that Congress could handle in a special session after the Nov. 4 election," they continue. "That package is likely to include an expansion of food stamps, an unemployment-benefit extension, aid to states for health-care costs and funding for roads and bridges. While House Speaker Nancy Pelosi has been considering a package totaling $150 billion, several economists urged her at a closed-door meeting Monday to consider a package approaching $300 billion."

How will this fly? "House Democrats are contemplating a huge infusion of public cash -- as much as $300 billion -- to stoke economic growth by creating public jobs and padding the wallets of struggling consumers," Lori Montgomery writes for The Washington Post. "A spending package of that magnitude would be far larger than anything Congress has previously considered and would be nearly twice as big as the stimulus measure President Bush signed in February."

Your new race: "In delving more and more into the specifics of potential financial remedies, Obama and McCain are moving beyond trying to convince voters that he is best prepared to handle the crisis to offering specific proposals for relief, particularly to voters who think that 'Main Street' was not addressed when Congress passed a plan to rescue Wall Street," Robert Barnes and Shailagh Murray write in The Washington Post.

Obama's plan: "Senator Barack Obama proposed new steps on Monday to address the economic crisis, calling for temporary but costly new programs to help employers, automakers, homeowners, the unemployed, and state and local governments," Jackie Calmes and Jeff Zeleny write in The New York Times. "[Obama] proposed giving employers a $3,000 tax credit for each new hire to encourage job creation. He said he would seek to allow Americans of all ages to borrow from retirement savings without a tax penalty; to eliminate income taxes on unemployment benefits; and to double, to $50 billion, the government's loan guarantees for automakers."

"Obama -- who regularly preaches tough love to audiences --said that people need to take responsibility for their own financial situation; that the crisis on Wall Street and Main Street has contributed to their woes -- but now is the time for fiscal responsibility in their own lives," ABC's Jake Tapper reports.

Tapper points out some glowing local coverage: "Obama maps rescue for middle-class U.S.," reads the headline in the Toledo Blade.

"Skeptics said the plan had popular short-term appeal but would have little impact on the underlying sources of anxiety and instability in the world economy," report the Los Angeles Times' Seema Mehta and Janet Hook.

Don't look now, but the race is about serious things again: "Suddenly, the presidential contest here is less about black and white and more about green, as in the frightening evaporation of trillions of Americans' dollars," David Saltonstall writes in the New York Daily News.

"Sen. McCain adopted a resilient tone to reflect his underdog status," Elizabeth Holmes writes in The Wall Street Journal. "Sen. McCain used some version of the word 'fight' 19 times and ended with a refrain from his convention speech, repeatedly urging voters to 'fight' together. Most notably, Sen. McCain and his running mate, Alaska Gov. Sarah Palin, pulled many of their punches."

Another new McCain start: "The new tack comes in stark contrast to speeches he gave all of last week," per ABC's Bret Hovell, Imtiyaz Delawala, Ron Claiborne, and Richard Coolidge. "Starting last Monday -- with the debut of the last incarnation of McCain's stump speech -- McCain hammered Obama as an untested and untenable choice for president, frequently voicing the refrain: 'Who is Barack Obama?' "

Time's Joe Klein is a fan: "It is not only punchier than his recent efforts, it's also a respectable effort -- well within the boundaries of political propriety -- comparing his policies to those of his opponent."

McCain "pirouetted away from the sharp criticism of Mr. Obama that has characterized his recent appearances to stress his own integrity and experience -- even while distancing himself from the economic policies of President Bush," writes Joseph Curl in the Washington Times.

Yet consistency helps: "McCain has struggled to settle on a consistent message as he enters the final month of the campaign with an unusual predicament before him: an enthused Republican base in his corner -- but Democrats and independents whom he once included in his 'McCain Majority' drifting from reach," Sasha Issenberg writes in The Boston Globe. "One moment he is an eager vessel for the disenchantment of riled conservatives who fill his crowds. Minutes later he is making the case for bipartisan consensus and establishment mores."

"The talk of change and promise of a fist-shaking fight to November failed to allay Republican concerns that the presidential race may be slipping beyond his grasp," Mark Z. Barabak and Maeve Reston report in the Los Angeles Times. For just about every Republican urging McCain to focus relentlessly on the economy, there was another who said McCain should continue questioning Obama's character by citing his association with William Ayers, a Vietnam-era radical. Some said the GOP nominee needed to do both, and also bring up the Rev. Jeremiah A. Wright Jr., Obama's controversial former pastor; others called that a mistake and said that a mix of messages was part of McCain's problem."

Who can predict what lasts for three whole weeks? "Still, aides held out the possibility that Mr. McCain would change tactics yet again if warranted by events," Elisabeth Bumiller reports in The New York Times. "Even on Monday, in an interview with CNN, Mr. McCain continued to criticize Mr. Obama for his association with the 1960s radical William Ayers, whom he called 'an unrepentant terrorist.' Mr. McCain said Mr. Ayers and his wife, Bernardine Dorhn, both founders of the Weather Underground, 'want to still destroy America.' "

(A vision we're sorry we missed: "The mood [inside the McCain campaign] is anxious, angry or subdued, interspersed with occasional moments of escape. Last Tuesday after the presidential debate in Nashville, Mr. Salter and Steve Schmidt, who is managing Mr. McCain's campaign, were at a karaoke bar until the small hours of the morning as Mr. Salter sang his way through a range of Bob Dylan songs," Bumiller writes.)

Are the times a-changin'? Not quite, not yet: "Unless McCain can convince voters -- sometime VERY soon -- that he is not the heir to the Bush legacy, this race, judging from the Post/ABC data, is darn near unwinnable for McCain," Washingtonpost.com's Chris Cillizza writes. "It's a testament to the power of the McCain brand, in fact, that he has been able to keep the contest as close as it has been for the last few months given the absolutely disastrous national political environment."

Where's this argument been? "The one fresh move McCain made in his Monday speech was to try to add Democratic congressional leaders Nancy Pelosi and Harry Reid to Obama's team," Time's David Von Drehle writes. "Given how deeply unpopular Congress is, trying to present himself as a positive vote for divided government makes sense. But why did he wait until he was so close to the finish line to try it? And how will his fellow congressional Republicans running tight races take to being thrown under the bus like that?"

Does McCain need to go further? "The obvious question is: Why not Jeremiah Wright?" Tucker Carlson writes. "Unlike Ayers, the Rev. Wright indisputably was one of Obama's closest friends. Obama himself has said so. Nobody in America needs to be reminded of who Wright is. As long as you've decided to go after Obama's character and associations, Wright seems like the obvious place to start. The 30-second attack ad essentially writes itself."

Might ads no longer matter? "Some analysts say neither side's spots are changing the campaign dialogue. This has been particularly true, analysts say, during the recent financial crisis that has at times overwhelmed the campaign itself," The Washington Post's Howard Kurtz writes. "Even if McCain and the RNC were to boost spending on the ad involving Obama and Ayers, several analysts doubted it would be effective during the current financial crisis."

Careful who you slam: "Sen. John McCain badly needs the cash infusion and momentum from a Tuesday night fund-raiser in New York. But the senator's recent demonizing of Wall Street made it tough to lure contributors, with Wall Street and corporate executives balancing their aggravation with the Republican presidential hopeful against their rising unease about his Democratic opponent," Monica Langley writes in The Wall Street Journal.

Says McCain supporter Carl Icahn: "I told the campaign that McCain must do a better job talking about ways to make corporations -- their executives and directors -- more accountable. . . . Frankly, Obama is doing a better job, and it's resonating for him."

Big boosts for Obama: "On July 11, the Obama operation created an additional new fund-raising arm that has been fund-raising below the radar, in a drive to collect and funnel money to Democratic parties in 18 key battleground states to register voters and turn out the vote for Barack Obama and down ticket Democratic contests," Lynn Sweet reports in the Chicago Sun-Times. "The 'Committee for Change' just as 'Obama for America' and the 'Obama Victory Fund' -- is part of the effort to elect Obama. By forming a third committee, the Obama campaign can go to donors who have given the maximum under federal contribution limits imposed on the first two committees but have not totally 'maxed out.' A similar set-up was in place in 2004 for the Kerry campaign."

David Broder canvasses in Pennsylvania: "The striking shift in Montgomery County, often a bellwether, makes McCain's task of recapturing Pennsylvania from the Democrats look almost like Mission Impossible."

McCain visits Blue Bell, Pa., on Tuesday -- but to what end?

Find out how a McCain press conference finished "second to a corpse for media attention": "Three weeks before the election, the Pennsylvania McCain campaign offers conflicting clues. Polls increasingly suggest that a state barely won by the last two Democratic nominees is all but out of reach for the Republican," James O'Toole writes in the Pittsburgh Post-Gazette. "A few weeks ago, when the McCain camp essentially ceded Michigan, his strategists told reporters that they were shifting their resources to states, like Pennsylvania, where they had a better chance. Today, Mr. Obama has a significantly bigger Pennsylvania lead than he does in Michigan."

USA Today's Kathy Kiely visits Pennsylvania: "On paper, the state should be a slam-dunk for Obama. . . . But anxieties about the economy and Obama have made for an unpredictable dynamic."

David Brooks already looks ahead to an Obama administration, with an expanded Democratic majority in Congress: "What we're going to see, in short, is the Gingrich revolution in reverse and on steroids. There will be a big increase in spending and deficits. In normal times, moderates could have restrained the zeal on the left. In an economic crisis, not a chance. The over-reach is coming. The backlash is next."

Can McCain blame Sarah Palin? Bob Shrum thinks so: "Palin hasn't broadened McCain's appeal; she has narrowed it to a shrunken Republican base that is seething with resentment, often openly bigoted and clearly insufficient to win the election," Shrum writes in his The Week column. "The vituperation that marks rally after rally on the Republican side is alienating voters. Palin, who is now far more barracuda than hockey mom, has become the symbol of it."

Might you even blame Palin for -- gasp! -- Democratic unity? "The one who put the Hillary Clinton voters in Obama's column was John McCain -- with his choice of a running mate," The Washington Post's Dana Milbank writes. "Something has happened in recent weeks among the Clinton faithful. Fear of the right-wing Palin, coupled with the economic collapse, has caused them to quietly swallow their Obama misgivings."

They HAVE read the "Troopergate" report up in Alaska: "Sarah Palin's reaction to the Legislature's Troopergate report is an embarrassment to Alaskans and the nation," reads the Anchorage Daily News editorial. "Her response is either astoundingly ignorant or downright Orwellian."

The scrutiny continues: "The state Personnel Board investigation of Gov. Sarah Palin's firing of Walt Monegan has broadened to include other ethics complaints against the governor and examination of actions by other state employees, according to the independent counsel handling the case," Tom Kizzia writes in the Anchorage paper.

(And she winks! A lot! "A honking sound from her armpit might have generated less buzz. That would have been just weird. The wink is ambiguous, one of those rich, laden, intriguing signals of unspoken human messaging that is difficult to decipher but impossible to ignore," Faye Fiore writes in the Los Angeles Times.)

As for the haters, Sen. Joe Biden is satisfied that McCain and Palin aren't stirring them up: "I'm no more concerned about it," he tells Nightline's Terry Moran, "as long as . . . John pushes it back in a box and Gov. Palin pushes it back in a box, because what you don't want to do is encourage -- I don't think they intentionally do it -- encourage people who really are fringe people."

The Boston Globe endorses Obama -- and un-endorses McCain: "Back in December, when we endorsed John McCain in the Republican presidential primaries, we wrote that he would conduct a campaign of 'substance, not demagoguery.' We didn't count on the other John McCain - the one who showed up for the general election. Whether in thrall to his handlers or his own ambition, McCain has abandoned respectful discussion of differences for a trough of pandering and invective.

The ACORN's still falling: "Investigators probing ACORN have learned that an Ohio man registered to vote several times and cast a bogus ballot with a fake address, officials said yesterday, as they revealed that nearly 4,000 registration applications supplied by the left-leaning activist group were suspect," Jeane Macintosh and Maggie Haberman report in the New York Post.

Since traders have proven so smart recently . . . "Barack Obama is likely to pick up 364 Electoral College votes, far surpassing the 270 needed to claim the presidency, by winning battleground states including Virginia, Ohio, Florida, and Colorado, online traders say," Bloomberg's Julianna Goldman writes.

New ad from MoveOn.org, featuring real-life "Gossip Girls" urging parental intervention. "Are you thinking about voting for John McCain? Just because other people your age are doing it, doesn't make it cool."

Hill Races:

How's the next guy going to top this? (And might this have broader implications in Florida?)

Yes, this is Mark Foley's successor: "West Palm Beach Congressman Tim Mahoney (D-FL), whose predecessor resigned in the wake of a sex scandal, agreed to a $121,000 payment to a former mistress who worked on his staff and was threatening to sue him, according to current and former members of his staff who have been briefed on the settlement, which involved Mahoney and his campaign committee," per ABC's Emma Schwartz, Rhonda Schwartz, and Vic Walter.

They continue: "Mahoney, who is married, also promised the woman, Patricia Allen, a $50,000 a year job for two years at the agency that handles his campaign advertising, the staffers said."

The priceless audio of the firing is HERE.

The speaker is not amused: "House Speaker Nancy Pelosi (D-CA) called on the House Ethics Committee to 'immediately and thoroughly' investigate a report by ABC News today that Florida Rep. Tim Mahoney secretly paid his former alleged mistress and campaign staffer to prevent a sexual harassment lawsuit from going forward," ABC's Emma Schwartz reports.

Maybe count one more for the GOP in the House -- but there's not much good news beyond that.

Liddy Dole, on the line again: "An increasingly hostile national climate for Republicans has shaken up Senate races across the nation, giving Democrats a plausible shot at achieving 60 seats -- a filibuster-proof majority that would embolden policy ambitions in Congress," per ABC News. "Whether Democrats can reach the 60-vote threshold depends on the outcome of races like the one in North Carolina, where Republican Sen. Elizabeth Dole is seeking a second term in a race that was never supposed to be close."

Time to panic? "The Republican National Committee, growing nervous over the prospect of Democrats' winning a filibuster-proof majority in the Senate, is considering tapping into a $5 million line of credit this week to aid an increasing number of vulnerable incumbents, top Republicans say," Politico's Jonathan Martin reports. "With party strategists fearing a bloodbath at the polls, GOP officials are shifting to triage mode, determining who can be saved and where to best spend their money."

A senior Republican official tells ABC that the party remains committed to its presidential candidate -- and its Senate candidates: "The RNC is going all in for McCain. The Committee had a record fundraising month in September -- raising over $66 million -- and is expected to have another record month in October. To help win in November, Republican officials are considering going an extra step and taking out a loan to help Senate candidates in some of the same states that will decide the Presidential election."

What if the cavalry doesn't show? "Some outside GOP-leaning groups appear close to consolidating their losses, pulling up stakes just as Democrats are expected to begin flooding House and Senate races with millions of dollars worth of television ads, robocalls and direct mail," Matthew Murray writes for Roll Call. "A source from a prominent conservative-leaning political action committee said Friday that dwindling bank accounts and a rash of unforeseen late-turning races is forcing GOP operatives off of Capitol Hill to scale back the number of Congressional contests they will invest in."

Collateral damage: "Darren White and Erik Paulsen were prized Republican recruits, House candidates poised to be the new face of the GOP on Capitol Hill. But as the two head into the homestretch of their campaigns, GOP operatives say they'll probably have to win -- or lose -- on their own. The money national Republicans earmarked for White in New Mexico and for Paulsen in Minnesota will likely go instead to protect GOP incumbents who once looked like locks for reelection," Politico's Patrick O'Connor and Josh Kraushaar write.

The Sked:

John McCain holds a women's town hall in Blue Bell, Pa. at 11:30 am ET.

Sarah Palin is also in Pennsylvania Tuesday -- she holds a rally in Scranton at 2 pm ET.

Barack Obama is preparing for Wednesday's debate and is down in Ohio, with no public events scheduled Tuesday.

Joe Biden is also in Ohio, with a series of rallies on tap -- in Warren at 10:30 am ET, in St. Clairsville at 4 pm ET and finally in Marietta at 7:15 pm ET.

President Bush has a photo op with the Detroit Red Wings at 2:45 pm ET.

The Kicker:

"I understand we get our priorities: first, Josh Beckett's arm and direct order, second the economy." -- Joe Biden, campaigning in New Hampshire (Red Sox Nation).

"I can confirm that the Obama campaign has paid for in-game advertising in Burnout." --Holly Rockwood, Electronic Arts' director of corporate communications, on Obama's advertising in an Xbox 360 racing game.

"If you're a chick with facial hair, you can be Todd Palin at this point." -- Radio contest host, at a Sarah and Todd Palin look-alike contest in Alaska.

Bookmark The Note: http://abcnews.go.com/Politics/TheNote/story?id=3105288&page=1