There’s so much bad news for John McCain and good news for Barack Obama lately it’s hard to zero in on any one development. But a couple of things jumped out at me in the latest ABC News/Washington Post poll.

Clearly the McCain camp decided weeks ago that its only hope was bludgeoning Obama, turning him into a terrorist-loving caricature. They pretty much said that to reporters. And while that’s gone over big at McCain-Palin rallies, where they call Obama a “terrorist” and a “traitor,” and carry stuffed monkeys with Obama stickers on their foreheads, it hasn’t worked with the American people. In fact, more people now consider McCain the “risky” choice for president: 50 percent of those polled called McCain risky, vs. 45 percent for Obama, while 29 percent considered Obama a “very safe” choice, vs. only 18 percent for McCain. Oh, and by the way: McCain’s negatives have climbed 9 percent since the last poll.

Let’s take that in: John McCain the war hero, the straight talk guy with the long history as a bipartisan stalwart in Congress. John McCain is now a more risky choice for president than a first-term senator by the name of Barack Hussein Obama? There is a god.

I was on Larry King Live tonight with GOP stalwarts Kevin Madden and Bay Buchanan (along with Paul Begala holding up the Democratic side), and while they held out hope for McCain, their hearts didn’t seem to be in it. Madden tried to blast Obama as “too liberal” for the American people, while Buchanan insisted Americans will reject his big-spending ways. But on a day when Republican Treasury Secretary Henry Paulson laid out his plan to spend $250 billion in taxpayer dollars to buy an equity stake in American banks, I asked them, what do terms like “liberal” and “big-spending” mean? Republicans seem lost in this changed world.

The best thing is that on the very same day, Obama laid out his own plan to put money in the hands of homeowners, taxpayers and small businesses, not just bankers. Many readers will remember I was critical of Obama during the primary campaign; I thought he didn’t talk enough economic populism, and that’s why Hillary Clinton crushed him in some of the closing primaries in economically vulnerable states. But Obama has come into his own in the last month. He’s not Hillary, and he’s not Bill Clinton; he’s not Joe Biden, either. (I did love seeing the three of them this weekend in Scranton, I will say.) Obama is the person he always was, with more specifics in his stump speech, more heft. According to most polls, this thoughtful, ruminative, compassionate guy is very reassuring to voters facing a global economic meltdown. Obama is feeling like the right person for the job right now, right on time.

I almost feel sorry for John McCain. His statement today that “we’ve got them just where we want them,” now that he’s behind in every poll, often by double digits, might go down in history as being as deluded a statement as “the fundamentals of our economy are strong.” But the McCain camp doubled down on their bet that the Republican base was the key to the election, first with the Palin pick, and then with their decision to just go negative on Obama. The base loves it, but they’ve scared off independents and moderates.

The Republicans have three weeks. It’s a lifetime in politics; we all remember what the Osama bin Laden tape did the last weekend of the John Kerry-George W. Bush race in 2004. Anything can happen. Still, I have deep faith in the American people, who have so far rejected the McCain fear and smear campaign. We’ll just keep watching.

It kept getting worse all week. Again on Friday a McCain-Palin supporter called Barack Obama a “traitor,” and John McCain said nothing. He used to challenge racist hecklers on the trail; he used to say he wanted to run an honorable campaign. But lately he and pit bull Sarah Palin are attacking Obama personally and politically in every city, from every platform. And they seem to be savoring the disgusting hate they’re fomenting — Obama being called “terrorist,” “traitor,” “socialist.” Haters screaming “Kill him.” 

Finally McCain kinda sorta stood up to a supporter in Minnesota who denounced Obama as an “Arab.”  McCain replied, “No, ma’am, he’s a decent, family man, a citizen that I just happen to have disagreements with.”  At another point, he said,  ”I have to tell you, he is a decent person and a person that you do not have to be scared of as president of the United States,” to boos and groans from the crowd.

It’s the topic of my Current video this week (text continues after video):

It’s no accident McCain stood up after several honorable Republicans and former McCain supporters began to speak out about his campaign’s hate-mongering. On Friday Michigan’s former GOP governor William Milliken started  backing away from the guy he endorsed.

“He is not the McCain I endorsed,” Milliken told a local paper. “He keeps saying, ‘Who is Barack Obama?’ I would ask the question, ‘Who is John McCain?’ because his campaign has become rather disappointing to me.

“I’m disappointed in the tenor and the personal attacks on the part of the McCain campaign, when he ought to be talking about the issues.”

Frank A. Schaeffer, a McCain friend and former supporter (McCain blurbed his book on military service), has denounced the McCain campaign in a Baltimore Sun Op-Ed he cross-posted on Open Salon.

“Stop! Think! Your rallies are beginning to look, sound, feel and smell like lynch mobs,” Schaeffer warned. Strong words, but he’s right. Even former McCain staffers like Mike Murphy and John Weaver are criticizing the tenor of the campaign. As David Gergen said on CNN Thursday night: “There is this free floating sort of whipping around anger that could really lead to some violence. I think we’re not far from that.”

On “Hardball” today the GOP’s Ed Rogers defended McCain and attacked me when I echoed Gergen and suggested the McCain-Palin demonization of Obama was creating a climate that could lead to violence. Luckily John McCain agreed with me, and disagreed with Rogers.

Update: Wow, I just watched the video, and I belatedly remembered: It was Ed Rogers who first called the Illinois senator “Barack Hussein Obama” on “Hardball” in November 2006. Wish I’d remembered this afternoon!

Here’s the video:

Reuters/Jim Young

Democratic presidential nominee Senator Barack Obama (D-IL) (R) listens to Republican presidential nominee Senator John McCain (R-AZ) during the presidential debate at Belmont University in Nashville, Tennessee October 7, 2008.

Barack Obama dominated this debate from the very first question John McCain fielded directly, when he condescended to the African-American questioner, a young man named Oliver, who asked how the $700 billion rescue plan passed last week would help the average American. McCain first implied that Oliver and other regular voters wouldn’t know that much about Fannie Mae and and Freddie Mac, then went into the misleading Fannie/Freddie claims Andrew Leonard broke down here. Then McCain told Oliver that his plans would “help Americans like Allen … stay in their home.” Allen? Allen was the nice older white man who asked the first question. So what about Oliver? Did he not matter? Was McCain confused?

Obama came up and broke down exactly how the rescue plan will theoretically (ignore the stock market) help the economy and American voters. Much of the rest of the night went like that. After rather inexplicably telling the audience that “energy independence” was the most important step the country can take to quickly solve the current economic crisis (when most experts agree energy independence will take decades), McCain a few moments later told moderator Tom Brokaw he couldn’t pick a priority among energy, healthcare reform and fixing entitlement programs. It was like he wasn’t tracking his own answers.

The conventional wisdom on debates drives me crazy, but it’s probably true tonight: If the candidate who’s trailing doesn’t decisively win, he or she loses. By that standard, McCain lost, but he lost even without that cliché. He was shooting for big points on his “plan” to buy back troubled mortgages; the trouble is, the rescue plan already includes that power, and the Obama camp says Obama lobbied to include it in the package. Even on his supposed strong suit, foreign policy, he was erratic, rambling at one point, “I’ll get Osama bin Laden, my friends. I’ll get him. I know how to do it!”

I blogged on this earlier, but I knew Sarah Palin lost the debate when she failed to acknowledge Joe Biden’s pain over losing his family. McCain’s standout gaffe wasn’t so awful or inhuman, but it was equally tin-eared. He called Obama “that one.” Really. Asking if the audience knew who voted for the Bush-Cheney energy bill, he pointed at Obama: “That one.”

My first reaction was that it was slightly racist — depersonalizing African-Americans has a long rhetorical history. But I think it was more like something a cranky baby sitter would say — Angry Uncle Joe, or Mr. Wilson. “You know who broke the coffee table? That one.” He made it worse by either deliberately failing to shake Obama’s hand at the end, or at best, forgetting to.

Lots of people said the town hall format would help McCain but it didn’t; it made him seem more cranky and uncomfortable with Obama. The audience didn’t favor anyone; were they full-body Botoxed? Not only did they not clap or cheer; nobody smiled; nobody seemed to move a muscle. It was hard to watch.

Time is running out for John McCain, and that looks good for Barack Obama. Or as James Carville just said, “You can call the dogs in, wet the fire and leave the house.” A few moments later, David Gergen countered: “It’s too early to declare victory because Barack Obama’s black.” That’s stark. The CNN instant poll just called it for Obama, 54-30. We’ll bring you more reaction soon.

I knew Sarah Palin lost the VP debate when she failed to acknowledge Joe Biden’s pain over losing his fanily. John McCain’s gaffe just now wasn’t so awful or inhuman, but it was equally tin-eared. He called Obama “that one.” Really. Asking if the audience knew who voted for the Bush-Cheney energy bill (an Obama mistake, by the way), he pointed at Obama: “That one.”

My first reaction was that it was a little racist – depersonalizing African Americans has a long rhetorical history. But I think it was more like something a cranky babysitter would say, Angry Uncle Joe, or, yes, Mr. Wilson: “You know who broke the coffee table? That one.”

Awful. He can’t hide his contempt for Obama.

Two thirds through the debate, Obama’s cleaning up. More later.

I’ve been wanting us to write on the right-wing effort to blame the mortgage crisis on the Community Reinvestment Act and other efforts to bring homeownership to lower-income, minority Americans, but this piece by Slate’s Daniel Gross is so great I’m not sure we could top it in a timely way. I’m going to borrow a big chunk here, but go read the whole thing.

“The thesis is laid out almost daily on the Wall Street Journal editorial page, in the National Review, and on the campaign trail. John McCain said yesterday, “Bad mortgages were being backed by Fannie Mae and Freddie Mac, and it was only a matter of time before a contagion of unsustainable debt began to spread.” Washington Post columnist Charles Krauthammer provides an excellent example, writing that “much of this crisis was brought upon us by the good intentions of good people.” He continues: “For decades, starting with Jimmy Carter’s Community Reinvestment Act of 1977, there has been bipartisan agreement to use government power to expand homeownership to people who had been shut out for economic reasons or, sometimes, because of racial and ethnic discrimination. What could be a more worthy cause? But it led to tremendous pressure on Fannie Mae and Freddie Mac—which in turn pressured banks and other lenders—to extend mortgages to people who were borrowing over their heads. That’s called subprime lending. It lies at the root of our current calamity.” The subtext: If only Congress didn’t force banks to lend money to poor minorities, the Dow would be well on its way to 36,000. Or, as Fox Business Channel’s Neil Cavuto put it, “I don’t remember a clarion call that said: Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster…

“Lending money to poor people and minorities isn’t inherently risky. There’s plenty of evidence that in fact it’s not that risky at all. That’s what we’ve learned from several decades of microlending programs, at home and abroad, with their very high repayment rates. And as the New York Times recently reported, Nehemiah Homes, a long-running initiative to build homes and sell them to the working poor in subprime areas of New York’s outer boroughs, has a repayment rate that lenders in Greenwich, Conn., would envy. In 27 years, there have been fewer than 10 defaults on the project’s 3,900 homes. That’s a rate of 0.25 percent.

On the other hand, lending money recklessly to obscenely rich white guys, such as Richard Fuld of Lehman Bros. or Jimmy Cayne of Bear Stearns, can be really risky. In fact, it’s even more risky, since they have a lot more borrowing capacity. And here, again, it’s difficult to imagine how Jimmy Carter could be responsible for the supremely poor decision-making seen in the financial system. I await the Krauthammer column in which he points out the specific provision of the Community Reinvestment Act that forced Bear Stearns to run with an absurd leverage ratio of 33 to 1, which instructed Bear Stearns hedge-fund managers to blow up hundreds of millions of their clients’ money, and that required its septuagenarian CEO to play bridge while his company ran into trouble. Perhaps Neil Cavuto knows which CRA clause required Lehman Bros. to borrow hundreds of billions of dollars in short-term debt in the capital markets and then buy tens of billions of dollars of commercial real estate at the top of the market. I can’t find it. Did AIG plunge into the credit-default-swaps business with abandon because Association of Community Organizations for Reform Now members picketed its offices? Please. How about the hundreds of billions of dollars of leveraged loans—loans banks committed to private-equity firms that wanted to conduct leveraged buyouts of retailers, restaurant companies, and industrial firms? Many of those are going bad now, too. Is that Bill Clinton’s fault?”

So ridiculous. Thanks, Daniel Gross!

The McCain campaign may be going off a cliff. Sarah Palin hit a new low — and that’s hard for her — when she smeared Barack Obama with his association with ’60s radical Bill Ayers, by claiming that Obama sees America “as imperfect enough to work with a domestic terrorist who tried to kill his own people” — as though Obama’s concerns about American society led him to ally himself with terrorism. Break it down, folks, and that’s what she’s saying. Palin’s got some syntax problems when she talks, so maybe she didn’t mean it that way — but I think she did. She’s found slightly different ways to say the same thing two days in a row, even after multiple news organizations criticized her take on the Obama-Ayers connection.

There seems to be no bottom for the McCain campaign. The candidate himself joined his running mate in the gutter Monday, with a stream-of-consciousness rant against Obama in New Mexico:

My opponent’s touchiness every time he is questioned about his record should make us only more concerned. For a guy who’s already authored two memoirs, he’s not exactly an open book. It’s as if somehow the usual rules don’t apply, and where other candidates have to explain themselves and their records, Senator Obama seems to think he is above all that. Whatever the question, whatever the issue, there’s always a back story with Senator Obama. All people want to know is: What has this man ever actually accomplished in government? What does he plan for America? In short: Who is the real Barack Obama?

As War Room reports (with a Mark Ambinder video), a McCain fan yelled back, “Terrorist!” Should that be a surprise?

Republicans aren’t even being clever or secretive about their fear and smear campaign strategy. “It’s a dangerous road, but we have no choice,” a senior McCain strategist told Tom DeFrank of the New York Daily News in a Monday report. “If we keep talking about the economic crisis, we’re going to lose.”

Chances are, they’re going to lose anyway. McCain is down an unbelievable 10 points in Virginia (it’s the communists, of course). He’s in trouble in Florida. In the NBC News/Wall Street Journal poll released late Monday afternoon, Obama had opened up a 6-point lead over McCain, but maybe more interesting, voters are happier with the way Obama has handled the economic crisis by a 9-point margin. And 59 percent of those polled said the economy was their top issue; foreign affairs came in a distant second with 16 percent.

Faced with that bad news, trust McCain-Palin to hammer away at the Bill Ayers connection, even though Ayers’ terrorism was 40 years ago, when Obama was 8. Is Palin saying the Democratic nominee was a member of WeatherKids? No, they’re just trying to smear Obama with the accident of living in the same neighborhood with a guy who, like it or not, is a fairly mainstream figure in liberal Chicago school reform circles. He owes his political rehabilitation to his family background — his father, Thomas, was a powerful utility executive with ties to the Daley family. Republicans should understand that kind of thing. And according to Sarah Palin, via Bill Kristol’s New York Times column today, they may bring back the Jeremiah Wright smears as well.

Obama is fighting back with some old news for McCain: His involvement as one of the “Keating Five” in the savings and loan deregulation scandal of the late 1980s. The campaign released this 13-minute video, “Keating Economics,” laying out McCain’s role in deflecting government pressure on campaign contributor Charles Keating. The congressional investigation into the actions of the Keating Five found no evidence of illegal wrongdoing, but criticized McCain for “exercising poor judgment.” At the time, McCain got political credit for admitting what he did was wrong, but now his campaign is calling the investigation “a political smear.” What won’t they change their tune on, now that the political chips are down?

I’ll be on CNN’s “Larry King Live” tonight at 6 p.m. PDT/9 p.m. EDT discussing the presidential campaign.