Given the convincing margin of Obama's victory, it may be that there is no single turning point to the election. But if there is one, I think it was John McCain's decision to go along with the bailout. At the time, I had thought (and from a public policy perspective hoped) that McCain would come out forcefully against the bailout and try to insist on a rewrite of its terms along the lines proposed by the House Republicans at the time. He could have denounced it as too expensive, lacking adequate controls, and an example of the sort of crony capitalism and "business as usual" in Washington that he would oppose. In addition, it would've allowed him to make a firm break with the Bush administration. Polls at the time indicated that would have been a popular position (and the exit polls I've seen suggest that it would still be a popular position today). In addition, even if it was thought necessary (and there is some indication that it was not) the enactment of the bailout did little at the time to staunch the bleeding on Wall Street.
Instead, the event turned into a political debacle for McCain. He interrupted his campaign to "save" the bailout and form a bipartisan consensus. Then, of course, he wasn't even able to do that when the House voted down the initial bailout package, so he looked ineffective on his own terms. Dick Morris also views this as a turning point when the election slipped away from McCain:
Had McCain voted against the bailout of Wall Street firms and backed the Republican alternative, there is no question in my mind that he would have won. After calling attention to his "suspension" of his campaign, McCain compliantly and supinely embraced the Bush bailout backed by the Democrats. America was waiting for him to speak out against excessive government spending and against bailing out Wall Street firms for their greed.
Some will blame the war in Iraq for McCain's defeat. Others will cite the economic crisis. But had McCain had the courage of his convictions, it would have sent a message to all voters that he was determined to change business-as-usual in Washington. By bowing to conventional wisdom, he undid the entire work of his convention and contradicted his message of independence from President Bush. His willingness to vote for the bailout package, earmarks and all, belied his pretensions of independence.
McCain frequently said that he would rather do the right thing than be president. But his vote for the bailout turned out to wrong.
Many have opined that this was a turning point for McCain because what it revealed about his and Obama's respective "styles." I'm not sure about that. Had McCain suspended his campaign and acted decisively and forcefully to oppose the bailout, and Obama remained "cool," I think that the politics of the situation would have been very different. The way in which the bailout was presented to Congress was outrageous and it would've been nice for someone to have said so. Had McCain opposed the bailout, in retrospect he could have been seen as independent and decisive (rather than merely impulsive) and Obama might have been seen as weak, indecisive, and just going along with the Wall Street-Washington establishment. It was the substance, not the style, that made this a turning point in my opinion. The style was secondary, except that McCain's style was so unhinged from the substance--why so much energy wasted just to rubber-stamp the administration's proposal?
Why didn't McCain do this? It is a bit of a puzzle, because I would think that McCain's instinct would have been to be repelled by the expense and cronyism of the bailout. I suspect that it is threefold.
First, McCain simply does not understand economics, did not understand the problem that the bailout was trying to address, nor how the bailout was supposed to address it. And, I've I opined previously, he is not that good at faking it when he doesn't know something. I suspect Obama had no idea what the bailout was all about either, but he came up with some good, empty talking points that were enough to bluff him through.
Second, McCain seems to have made a political calculation on the bailout that the way he could best play it would be to use it as an opportunity to show his ability to form "bipartisan" consensus in a time of crisis. Which was a bad decision, I think. First, it didn't work once the bill failed to pass the House inititially. Second, I'm not sure that it is a good political move to be seen as the leader of a bipartisan consensus on high-profile legislation that is a political turkey (leaving aside the merits).
Third, I think McCain must've bought into the idea that the bailout would work and take the issue off the table. Instead, at the time, there was no indication that the bailout was even working. So it was a political turkey with little policy pay-off. Even worse, by broadcasting his "leadership" on the bill, McCain tied himself both to the Bush administration and to whether the bill would actually work to address the financial crisis at the worst possible time. And this was all based on Hank Paulson's "trust me" approach to the issue. Given the track record of the Bush administration I have no idea why anyone would want to tie themselves to any policy of the Bush administration, much less one based on a "trust me" justification (I recall that approach didn't work out so well with a certain war we got ourselves into). Regardless, it ended up tying McCain to Bush at the worst possible moment, on the worst possible issue, with the worst possible political optics.
All around, I agreed with Dick Morris then and agree with him now that if there was a turning point, that was it. Would McCain have won had he followed Morris's advice? My intuition is that it very well might have. That he didn't seize this opportunity, however, might speak to why McCain lost and what it revealed about why he shouldn't be President. He may be a leader and he may be decisive, but that doesn't mean he actually understands what is good or bad policy to be decisive about.
On the other hand, I'm not sure that the experience told us much about Obama's ability to be President--other than that he was savvy enough to stand back and let McCain drive himself off the cliff. (It is also interesting that Obama coasted when he was elected to the Senate because his opponent self-destructed). Obama did remain cool and above the fray throughout that time. At the same time, one of my biggest concerns at this point is that the flip side of Obama's coolness and desire to form consensus is his possible tendency toward indecisiveness and undue compromise and to avoid being pinned down and taking responsibility for difficult decisions. I'm not sure that his response to the financial crisis provided much insight one way or the other in determing whether he was cool or just indecisive.