The Wall Street mess now takes center stage in the presidential race. With company after company biting the dust, can John McCain survive as the representative of the incumbent party?

So far, McCain has focused on a populist criticism of Wall Street and its irresponsibility, firing away at corporate greed and lending practices.

But he has to fuse the issues of the economy and taxes — to show how Barack Obama’s tax proposals would lead to a catastrophic implosion of the nation’s capital base.

With the top Wall Street houses crashing for a want of capital, how can Obama justify an increase, and perhaps a doubling, of the capital-gains tax?

Obama has already said he might drop his tax hikes if the economy weakens. After noting that it’s pretty sad when your best idea for how to help the economy is to abandon your own proposals, McCain should call on Obama to give up on those new taxes right now.

People will sit on their capital rather than invest it if their gains are to be taxed at twice the current rate. And raising taxes on a troubled economy is akin to bleeding a sick patient — medieval "medicine" that does more to kill than to cure.

McCain needs to force Obama to choose between his leftist commitment to income redistribution and the common-sense point that higher taxes on investors and "the rich" would merely deepen the economic mess.

If Obama refuses to abandon his tax hikes, he’ll be seen as putting his ideology ahead of the nation’s needs. If he does the reverse, he’ll be admitting that his tax program has been a mistake — and, by recanting, show how unsteady his hand would be on the tiller.

Hiking taxes at the outset of a slowdown has always made things worse. McCain need point no further back than the first President George Bush, whose tax increase hit just as the economy was slowing from the Reagan expansion — triggering a recession that let Bill Clinton win the White House.

As the financial failures spread, voters will focus on the bad news and be inclined to hand the White House to the party that’s out of power. But if they focus on the cure Obama proposes, the bad economy could work to McCain’s benefit.

Views expressed in this column are those of the author, not those of Rasmussen Reports.

See other recent columns by Dick Morris.

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