In the wake of financial upheaval, McCain’s prospects have plummeted. The campaign’s response has not helped – erratic, desperate to get this behind them, and, if the Biden-Palin debate is a harbinger, blaming Wall Street greed as the cause of all that ails. In short, the Obama approach.

That tack is a missed opportunity. Much as the rise in oil prices permitted the McCain campaign and House Republicans to force the issue of drilling, and differentiate themselves from Washington interest groups politics as usual, the continuing crisis on Wall Street allows McCain to solidify his image as a leader who recognizes what Washington can—and shouldn’t—do.

We’d been told that we wanted change from President Bush and all things Republican. But to argue that was to willfully disregard the even more dismal disapproval of the Congress, and the media itself, who have fallen a long way in our national regard from the days of Cronkite-like esteem.

In fact, the desired change was from “business as usual” among our self-styled elites. That giant lack of confidence was again stunningly signaled with the public backlash to the bailout bill, despite the fact that all of the Washington establishment and elite media demanded it. We don’t trust our leaders any more, and as markets are showing, perhaps with good reason.

It is that void of trust that McCain needs to fill. In Tuesday’s debate, and again and again in the month to follow, McCain needs to contrast the man of action v. the lawyer, and the track record of correct judgment v. votes and associations that are simply too radical for comfort.

But beyond that, the McCain campaign should not expect to “put this financial issue” behind them. Rather they need to break out that economic straight talk express and articulate a principled vision for the role of government in our financial sector.

First, McCain needs to state clearly that, when it comes to the current mess, there is plenty of blame to go around. It isn’t just Wall St. greed, though that surely played a significant part, but also Washington’s establishment that created the environment that allowed bad business practices to flourish.

Sen. Dodd and Cong. Frank should be brought to task for combining the implied government backing of Fannie Mae and Freddie Mac with a repeated refusal to regulate them more stringently, and for pushing legislation and regulations which lowered credit standards at community banks and helped shift the entire mortgage market culture.

Add to that the unwillingness of several administrations to adequately fund the SEC’s oversight division, the backfiring of various well-intended regulatory reforms such as mark-to- market accounting, expanded tax incentives for home ownership and low interest rates, you’ve got the perfect economic storm.

Mr. McCain needs to be the maverick again, and be against having the same regulators and politicians that helped create this mess be the ones to self-servingly proclaim to be fixing it.

Second, McCain needs to be clear that this problem is going to be with us for a while, and handled wrong (and, sadly, maybe even if handled right), it could be huge. We can learn from sectors of the economy that are just fine thank you, like small community banks. And we need a McCain plan that, unlike the “Wall Street” Treasury plan’s top-down attempt to value the leveraged maze of complicated securities based on mortgages, is a “Main St”, bottom up, solution that refinances and properly values the underlying securities that are causing such uncertainty all the way up the chain. Voting for the Treasury plan may have been necessary in extremis, but markets are confirming that it’s just another band aid that doesn’t yet really fix the problem.

That leads to the third point Sen. McCain should make: that we are at the time of a defining choice. Under the wrong leadership, taxpayer liabilities could swell, not just through tax and spend policies, but as the post-bailout line forms of all those businesses, municipalities, and even states hold out the tin cup for their shot at a federal bailout.

Here is the difference McCain needs to emphasize: If we get an administration which continues to believe as the Washington establishment largely does that they get to play Santa Clause – to give out gifts, redistribute wealth, pay for various benefits, and solve anything and everything that ails us, and that the money to do it is all somehow magically and marvelously disconnected from the economy and divorced from consequence to the taxpayer, then we will pay an even greater price down the road.

But if, like the town of Vallejo, CA, as a nation we’ve had our Pogo moment, and finally realize that someone has to pay for all those wonderful promises, and that that someone is us – then we want a McCain administration that isn’t going to embark on burdening promises we can’t keep and programs we can’t afford.

The numbers have rallied for McCain when he’s spoken such politically incorrect but frank truths before. He can do it again.