Neither McCain nor Obama won their party's nomination because of their competence on the economy. Many Republicans wanted to reward McCain for his principled stand on the "surge" and many Democrats wanted to punish Hillary Clinton for her vote on the Iraq war. (Perhaps we need to think about the consequences of a really long campaign season when we pick candidates who may no longer be relevant a few months down the road - the alternative could have been Romney versus Clinton.) Well, the September surprise is here and both nominees are now scrambling to get ahead and on top of the new issue du jour. Obama has regained a slight lead, bolstered in no small part by his new flurry of negative ads and the McCain's gaffe on "fundamentals." More important, if the markets continue to tumble, this election isn't going to be close.
For these are among the worst economic conditions this nation has faced since the Great Depression. Bear Stearns, Fannie Mae and Freddie Mac, Lehman, and Merrill Lynch are the gold-standards on Wall Street! And if these weren't enough, we know that Wash Mutual, Goldman, and Morgan are also on the brink. And the Fed Reserve coming in to bail out AIG - now that's an admission of impending tragedy if ever there was one. This was not a confidence-boosting signal to Wall Street, and the Dow tumbled another 450 points on Wednesday. Equally unpersuaded, as I write, markets are falling hard in Asia.
This September surprise may turn out to be the agenda-setting event of this election. Not Iraq, not Bush, not Jeremiah Wright, not even lipstick. So dominant is this Issue Number One that barely any attention was given to the terrorist attack on the American embassy in Yemen today. This recallibration of national priorities is non-trivial. If it's the economy stupid, then it's a referendum on the Republicans, unless McCain can work some Rovian magic.