While nobody could have predicted that a global financial crisis would erupt in the fall of 2008, it was observable a year ago that the incomes of the middle class had stagnated during the Bush years. (I know because I observed it--in fact, in 2007 I published a whole book largely on this very point.) McCain previously had expressed doubts about many Bush policies, from the tax cuts of 2001 to the administration's easy indulgence of Fannie Mae and Freddie Mac in 2005. He could have continued that theme in 2007 and 2008. He could have campaigned as Nicholas Sarkozy to Bush's Jacques Chirac--a critic from within the party who offered change combined with practical experience and a moderate worldview.It's possible that McCain simply couldn't have won the GOP nominations without endorsing the complete extension of the Bush tax cuts - and I think his deeper mistake (to the extent that any policy decision has really mattered in this election) was failing to make his new tax proposals more explicitly middle-class friendly. But if I'd been advising him during the pre-primary period on which of his various heterodoxies to abandon and which ones to keep, I would have suggested that he consider going further to the right on immigration and cap-and-trade - instead of sorta-kinda going to the right on the former (but not really), and rarely talking about the latter at all - while staying slightly to George W. Bush's left on taxes. In an election that's being fought on domestic issues, this would have allowed McCain to attack Obama from the right on global warming legislation ("I support sensible measures to combat climate change, but I've decided we just can't afford Barack Obama's costly regulations") and border security ("I have a long pro-immigrant record, but we need to have law and order on our southern border, and Obama can't deliver"), while blurring the differences between the two on tax policy ("I broke with my own party to support a more middle-class-friendly tax agenda!").
... The moment at which such a message became impossible for McCain was his decision to embrace the full re-enactment of Bush's tax cuts. It must have seemed an easy decision back in the primary. It was a litmus test for many conservative voters and, after all, with Democrats poised to expand their majorities in the next Congress, there was zero likelihood those tax cuts would ever be enacted.
Trouble is, by founding his campaign on a full supply-side message, McCain denied himself the opportunity to say anything new. Worse, because that message originally took shape as a (correct) response to the problems of the 1970's, McCain's attempt to dust it off and reuse it as a response to the very different problems of the 2010's only made him look more out of date.
The fact that McCain more or less did the reverse could be attributed - as Jon Chait would doubtless attribute it - to the awesome power of supply-side orthodoxy over the GOP. But I think the simplest answer is that McCain really cares about immigration and climate change, and doesn't care that much about tax policy (save insofar as it relates to earmarks, I suppose). So he flip-flopped heavily on the issue that doesn't matter to him, and tried to stick closer to his true beliefs on the issues that do. It's a choice that speaks well of his principles, even if it's hurt his chances in November.
