Race *is* a factor in many locales, but as has been pointed out, Dems weren't going to win there, anyway. Lyndon Johnson was right- when he signed the civil rights act, dems lost the South for at least a generation.
The problem for repubs, and McCain, is that Obama doesn't come off as "Black", at all. Even people who harbor some lingering racial stereotyping and distrust don't see him that way. And that's because Obama isn't a product of American Black culture, but of his maternal family's culture- White America, and of Harvard. The way he carries himself, the way he speaks and thinks have nothing to do with those stereotypes, and everything to do with a very educated and intelligent persona who transcends the whole idea of Race.
As for the rest of it, McCain is very much caught between a rock and a hard place. The Bush faction beat the skins right off of the Terrar! drum and the national security drum- they're worn out, ineffective. the electorate is sick of hearing 'em. The electorate is also sick of Iraq, and will gladly accept any sort of withdrawal where our troops aren't taking lead in their backsides...
Everybody other than the Faithful have very deep concerns over the state of the Economy and the Debt, both of which are consequences of Republican rule and trickledown economics that haven't delivered other than to the very top. It's gotten so weird that even when much of America is experiencing recession type economic conditions, nobody will admit we're in a recession because those at the very top are doing so very, very well... Swing voters are acutely aware of these things, and have rightfully concluded that they're been flimflammed by Repubs. Even people who normally wouldn't vote Democrat will do so, simply on the basis of throwing the bums out...
Yet McCain has to hew to the party line to maintain the faithful and to attract funding... with much of the big money repub donor base already not being enthusiastic about his candidacy in the first place, they're not anxious to invest in what they see as a losing proposition, either.
What's happened is that Repubs have discredited themselves by creating a yawning chasm between what they promised and what they delivered, and that the public is very much chagrined at having been duped quite so badly on so many issues... even people who don't conceptualize it in those terms.
Huckabee's right- Repubs everywhere, particularly McCain, are going to have to sell themselves on the basis that they're better, that they'll do a better job, not that Dems or Obama are worse- and that'll be tough when they have to toe the party line, the results of which are definitely worse than anything we've seen in a very long time... They've lost the perception that they hold the moral highground, rightfully so, which means that they won't be perceived as pushing the opposition down into the mud, but rather dragging them down, with all that entails...
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