That's the question I've been pondering lately. I've been ignoring the polls, which I don't think will mean a lot until after the post-convention bounces, if any, have diminished, and thinking about historical factors, and for the most part they're not in John McCain's favor.
1. One historical factor is that we rarely elect sitting senators to the White House, and none since 1968, but since Obama's a sitting senator, too, we have to throw this one out the window. Whoever wins the election will make history on this count.
2. A second factor is the difficulty of a member of the same party replacing a very unpopular president. Only about 1/3 of the populace approves of the job Bush is doing, and McCain, being the candidate of that president's party, is inevitably seen by many as a continuation of the same. It's not fair, and I don't even think it's accurate, but it happens nonetheless, and it makes winning the election an uphill climb for McCain regardless of any other advantages he might have.
3. A third factor is McCain's age, which actually affects the race in two distinct ways. First, Johh McCain would be the oldest elected president ever. Of course we've broken that record before, most recently with Reagan, but it's obviously a rare thing, and it does seem the American public doesn't generally want presidents who are too old. All other things being equal, this might not be too big a hurdled, but other things aren't equal, because, second, we would be going back a generation, which is, if not unprecedented, exceedingly rare. We have now had two baby boomer presidents in a row, and the liklihood of stepping back to a pre-baby boom president is highly unlikely. The U.S. is, in many ways, a country that has traditionally looked forward, rather than backward, and this general disinclination to revisit future generations to select our presidents is but one example of that.
4. A fourth factor is that McCain is seen as an inisder, while Obama is seen as an outsider (and we can't plausibly both criticize him for lack of experience and claim he's an insider). Every president from Jimmy Carter on, excluding the first President Bush who won on the coattails of a very popular predecessor, has been an outsider, and has trumpeted that fact. Obama may be less of an outsider than Carter or Clinton, but McCain can't possibly compete on this angle--he is the establishment, at a time when we don't like establishment figures. (As to the wisdom of electing outsiders, I beg to differ with my fellow citizens.)
5. Fifth, incumbent presidents don't win when the economy is weak, nor does the person from the same party who would succeed them. It matters not if Phil Gramm is right that we are not in a recession--a majority of Americans believe we are, and their votes will be determined by their own beliefs, not Phil Gramm's. (And could Gramm possibly have done a better job of reinforcing the public perception of the Republican Party as out of touch on economic matters, with his claim that we're just a nation of whiners--my neighbor is on a six week layoff because of the slump in truck sales, and I don't think his financial concerns are merely hypothetical.)
6. Sixth, fundraising matters. It's not true that the biggest winner always wins, but there is a strong correlation, because the person who can spend the most is generally able to define the issues and candidate attributes most successfully. The fundraising differential is probably a function of the other factors listed, but it has electoral effects of its own. And while it's more than just a little bit legitimate to critique Obama for reneging on his pledge to accept public financing, I just don't think that issue will have legs--Republicans never successfully critique the Democrats for having too much money because they are, far more than the Democrats, the party of the wealthy. And as things stand, Obama has raised around 280 million to McCain's 111 million, a stunning differential.
7. Finally, the religious right has been essential in the victories of Republican presidents since Ronald Reagan (and, actually, beginning with Jimmy Carter before him). Despite McCain's promises to elect "strict constructionist" judges who will overturn Roe v. Wade, and in spite of being the graduation speaker at Jerry Falwell's Liberty University, religious conservatives have not warmed up to McCain. James Dobson, for one, has said he wouldn't vote for McCain, and my religious conservative mother is very unhappy with his candidacy as well. The question is whether religious conservatives' devout belief in voting will overcome their McCain disdain. If not, look for Obama to pick up Virginia or Colorado--states McCain can't win without.
So can McCain overcome all that to win? I wouldn't bet on it. Keep in mind two things, however. First, campaigns do matter. In the equilibirium situation where both candidates run good campaigns, all the other factors determine the outcome, but if one candidate runs a bad campaign (cough, Dukakis!, cough). But so far McCain has shown the tendency to run the weaker campaign, mostly because he can't resist making jokes that are inappropriate in the particular context (but thank God he has a sense of humor). And Obama has seemed to move on relatively unscathed from what would seem devestating blows, particularly the Jeremiah Wright business. Republicans can justifiably wonder why the scandal isn't sticking, but for my part I'm glad it hasn't, as such scandals have never stuck on the Republicans before. (Let's face it, if Wright had suggested nuking the State Department, he would have been crucified by the right wing, unlike Pat Robertson, who actually did say it and suffered almost no fallout--the patriotism stuff has been a one-sided game for far too long.)
Second, it still remains to be seen whether there are enough moderates and liberals who won't vote for a black man to keep Obama from winning. I personally believe not (and, of course, an Obama loss would not be conclusive evidence, as there are other reasons to oppose him), and I expect that an Obama victory this fall will prove it.
In summary, McCain's only chance is a huge Obama misstep, or to find a scandal that will stick. It's not impossible, but at this point it sure doesn't seem likely.