Obama has problems, but McCain has bigger problems. Here’s how the race breaks down now.

GAFFES.
Palin’s bimbo eruptions versus Biden’s bloviating. Is it a wash? Or is the prospect of a President Palin no longer just a hilarious SNL skit, but a prospect too embarrassing for swing voters to bear?

TONALITY.
Obama’s faux Southern accent is grating. Palin’s Marge from "Fargo" is charming. Mainly because it’s REAL. As Barry knows, tonality is key. The prospect of listening to his languid Montgomery Baptist preacher meets Motown rap mogul shtick for four years is troubling to us “Tonals.” Hillary's fake Southern drawl was bad enough.

LUCK.
Barry O is the luckiest man in politics. In every election he’s faced wackjobs (Alan Keyes), the scandal-plagued (Peter Fitzgerald and then Jack Ryan), or campaign incompetence (Hillary Rodham Clinton), or external circumstances so outrageously unfavorable to the opposition that Obama could lope to victory untested and un-vetted. Camp Hillary’s bone-headed big-state strategy gave Obama the Democratic nod based on proportionally huge caucus victories in sparsely populated red states (no Democrat has a chance of winning Idaho in a winner-take-all general election).

And now Obama has been bequeathed a series of early Chanukah gifts: a skittish stock market, a housing market in the dump, an economy on life support, a grossly imbalanced federal budget, a thoroughly unpopular incumbent, and a nation generally loathed around the rock. With such a strong wind at his back, Obama should be twenty points ahead. But he’s not. How the The Chosen One finesses these unprecedented gifts from on high will determine whether he’s crucified or survives to save the living and the foreclosed.

FOREIGN POLICY.
Lucky for Obama, foreign policy is no longer a top voter concern. His clear, consistent anti-war position (catnip to his liberal base) is not a popular position in a general election. Five years on, the Democrats have finessed every possible stance on the Iraq War, except the winning one.

At the Ole Miss debate McCain introduced a strategic thesis that will be the game-changer in Iraq, Afghanistan, Pakistan, and, finally, Iran (and which Obama will be forced to adopt if elected). Though there are over a dozen key components to the New Iraq Strategy (including government reform, regional cooperation, capacity-building, economic development, and dramatically increased Iraqi security presence), it crystallizes into two ideas: Sectarian Cooperation and The Surge.

McCain made it clear at Ole Miss that he will apply this winning strategy to Afghanistan. Obama was caught flat-flooted. He kept repeating that we dropped the ball in Afghanistan. And McCain essentially replied, “Dude, I was saying that YEARS AGO. And now we are going to pick the ball back up JUST LIKE WE ARE DOING IN IRAQ.” In other words, “The strategy we will use in Afghanistan will be the one that’s now working in Iraq. Just as you embraced tenets of Bill Clinton’s Democratic Centrism, you will also adopt my Middle East strategy because it’s battle-tested and true.” All Obama could do was state the obvious: that we hadn’t found Bin Laden (a point on which McCain would agree). But who has a new and proven strategy? Only Mac. With his vastly superior knowledge of Caspian oil politics, the Middle East, and the Far East, McCain can win in a landslide, even with the Alaskan Albatross around his neck, but ONLY IF he can bring the national discussion back to foreign policy.

Message to David Alexrod: given a choice between being popular with Berlin’s anarcho-syndicalist uber-pacifists, and WINNING a war, America will choose the latter every time.

COMMANDER-IN-CHIEF?
At least “Fredo” (my Sicilian chiropractor’s name for Dubya) attempted to serve in combat, albeit briefly and sketchily. Obama made no such attempt. McCain not only famously served in combat, but he understands that strategies often radically change mid-way through a conflict. This is not a problem for McCain; this is how to “win” a war. “Winning in Iraq” is a dirty concept for Obama and the Democrats. Like a know-it-all backseat driver, Obama merely calls attention to “the mistakes made.” Meanwhile, McCain’s confident forward-moving embrace of the New Iraq Strategy makes Obama look like a stubborn, out-of-touch amateur. Sort of like the current man-child occupying the Oval Office.

ONE OF US?
Will Swing Voters trust this Kenyan-Hawaiian-Kansan-Hyde-Park “community organizer” guy? The Bradley Effect is operative, but the Teresa Heinz Kerry Effect is stronger. John Kerry lost in 2004, in the psychodynamic trenches, because his phony, shifty, Swiss boarding school demeanor and kooky, botoxed, billionaire heiress wife made him seem “foreign,” unfamiliar, and a wee bit “French” (i.e., way too apologetic about American power). Will Barack the liberation theologian and Michelle the closest Black Nationalist suffer the same fate?

PRESUMPTION.
Precisely because of his vast appeal to swing voters, John McCain has been the presumptive “next president” since the 2000 South Carolina Republican primary. He got a raw deal that primary. The Rove-ian wranglers roughed him up. And he learned a lesson: he was not going to be so pure that he shied completely away from political hardball. It’s no secret that the only things McCain admires about the Bushies are their highly disciplined political operation and willingness to do whatever it takes to win. This cycle, according to Rove himself, Camp McCain has indulged in Rove-ian warfare: 1. Gross caricatures of the opposition; 2. A dribble of unsupported slime; 3. Absolute control over press access. The shackles placed on the bumbling, blundering Sarah Palin are a case in point. McCain seems ready to freelance on a moment’s notice, and is bridling at the Schmidt-installed bit. Palin, however, seems comfortable keeping her trap shut, as if she knows what we all now know: the woman is intellectually unprepared to be the leader of the free world. And that’s not sexism. That’s just the facts, as even diehard conservative women admit.

But as much as the Democrats would like this to be an election between Obama/Biden and the Wasilla Wingnut, the hard fact is this: John McCain is at the top of the GOP ticket. As with the ascension of underrated careerist, George H.W. Bush, in 1988 after eight years of Reagan, swing voters are inclined to reward McCain for a lifetime of courageous service (even with Quayle the Second by his side). But he’s not just the next moderate in line. He’s someone who, at key junctures, put country before party. In this way he is also like George H.W. Bush, who maligned Reaganomics as “voodoo economics,” and who was far more environmentally progressive once he held the top job (the revised Clean Air Act is a major legacy of his administration). And, in a bit of ironic revisionism on the part of Democrats who opposed the 1991 Gulf War, Bush Sr.’s moderate approach to Iraq (he refused to march into Baghdad, lest he lose his international consensus) is now seen as more enlightened than his prodigal son’s neoconservative nation-building. While McCain would come to disagree with Bush, Sr. on this point, he admired the man's creative thinking.

To overcome presumption, a contender must deliver a clear and decisive knockout. He can’t just win on points. So far, Obama has failed to do so.

MAIN STREET.
There are two streets that matter to people in power: Wall Street and K Street. But a third is rearing its head. Main Street began as an appellation for Sinclair’s Lewis’ Gopher Prairie. It’s now metaphorically metastasized to cover all those folks that are mad as hell at the excesses of Congress and the overzealous derivative crowd. As nervous legislators sell working and middle class Americans on a staggering bailout for banking CEOs and their lobbyists, how it is spun by Democrats (“GOP laissez faire gang got us into this mess”) and Republicans (“McCain saved the country from the excesses of Bush AND the big-government Democrats”) and how Main Street receives the spin will determine a lot.

Mainstream media has pushed the line that Obama has won the economic argument. But their analysis is shallow. At the RNC, McCain cleverly paired Bush with reckless Republican overreach (they “came to change” Washington, but “Washington changed” them). He can now position himself as the defender of Main Street against the corporate-controlled actors in both parties, leaving Obama the populist defending a bailout that is hugely unpopular with the voters he needs to win.

SIZZLE, STEAK, OR BOTH?
Think back on the Clinton-Dole debates and compare them to the first McCain-Obama debate. Dole came across as a tired, boring curmudgeon. A cynic. A naysayer. A nasty old shoe. McCain, despite his age, appears to be fresh, spirited, and pleasantly feisty. Because of his age, he may fumble a few more words than he used to, but his energy is palpable. What’s more, his track record is not some paint-by-numbers Republican playbook. It is unique. Obama may have the metrosexual style, the netroots prowess, and the Gen Y sex appeal, but McCain has the policy credentials. In times of great uncertainty, where moderate voters also want some kind of change, they will choose an agent who’s comforting, yet fresh. Is McCain fresh enough? Is Obama comforting enough? There indeed is the rub.

REFORM VS. CHANGE.
It’s the perennial policy debate question: should we adopt a whole new plan to solve a problem or can we avoid all the risks and disadvantages of the new plan, while solving the problem through a minor repair of the status quo? Most Democratic voters think that Obama represents the new plan. But does he? Maybe, in fact, Obama is a minor repair of the tax-and-spend playbook, while McCain offers a brand new direction. Who represents reform, who represents change, and what voters value more are all definitely up for grabs.

SWING STATE PRAGMATISTS.
This election is in the hands of the 19% of the electorate that is STILL undecided. These swing voters are Independents, moderate Libertarians, Rockefeller Republicans, and Reagan Democrats in states like Colorado, Minnesota, Wisconsin, Michigan, and Pennsylvania. These are all states that Obama now holds. But if he loses any two, the election is over, not only because these are key battleground states, but because Obama, even with his recent rise in the polls, has not shown a convincing ability to pick off must-win Republican strongholds – not Indiana, not Ohio, not Florida, and not Georgia, though yuppie-fying North Carolina and Virginia remain possibilities. Many of the folks in these swing states are post-partisan. They are pragmatic realists. They make political decisions not only based on knowledge, judgment and experience, but on gut instinct as to whether a candidate has the pragmatic moxie to move the country in a bold new direction. Can Obama get off his perch and talk the talk of policy-specific pragmatism, while rallying his cult-like base of lefty true believers? To be seen.

CENTRIST?
In 1992 the old warhorse Bob Dole had been around national politics a long time. One scenario that Team Obama would like to see play out is a repeat of Clinton v. Dole in 1992. Certainly Obama aspires to Clintonian greatness, but the first town hall debate in Oxford, Mississippi, proved he’s not there yet. Not in command of policy detail. Not in nuanced understanding. What Clinton had, and what Obama lacks, is a genuine centrist streak. Obama is trying to wear that mantle, but it doesn’t fit. Deep down, the lanky constitutional lawyer is more Cornell West than Henry Louis Gates, Jr. (and a far cry from Shelby Steele). And it shows. When asked at the debate what programs he would cancel in light of today’s need for severe budget-cutting, the Illinois Senator could not name one. When repeatedly asked throughout this campaign how often he broke with Democratic orthodoxy, the candidate remained silent. Working across the aisles (which EVERY politician must do to get legislation passed) is nothing special. Courageously bucking your party on major issues IS special. McCain has bludgeoned Obama on this point. Obama keeps claiming that McCain voted with Bush 90% of the time, but Obama voted with Bush 50% of the time. That difference of 40% is rendered meaningless when you consider the big issues on which McCain significantly differed with the Bush administration, including torture, Gitmo, the 9/11 Commission, campaign finance reform, the conduct of the war in Iraq, veterans, global warming, and now key parts of the proposed 700 billion dollar bailout. Obama says McCain is “more of the same,” but, in fact, it’s Obama’s who is “more of the same.” Obama is new only in the style of his politics, not in the substance of his liberal Democratic beliefs. John McCain began to show that in Oxford. No surprise that Obama wanted to curtail the number of these town hall debates.

“THE DELIVER-ER”
The spin on the financial deal, like the spin on most differences between Obama and McCain, comes down to this: Who Can Best DELIVER on his promise of change or reform? It seems counter-intuitive that a member of the dreaded GOP could be such an agent of transformation. And Obama makes that valid claim repeatedly. But the truth is, of the two candidates, McCain has the track record of bucking powerful members of his party on major issues. If we only looked at record, it is clear that McCain would do more to shake the country loose from the stubborn pieties of both parties. He is the one true independent in the race. Can he win that argument, while still appealing to the GOP base?

His fate completely depends on the answer.