I was thinking this evening about recent elections and started speculating about how things might have unfolded had John Kerry had beaten George W. Bush in 2004.
I'm pretty sure that Kerry would have been a one-termer in this scenario. The economic bubble was a bipartisan creation, and my sense is it still would have popped around 2008 leading to a financial crash and subsequent economic downturn of more or less the same magnitude. This almost certainly would have sunk Kerry in his re-election effort... though it likely wouldn't have unfolded until well after the Republicans had chosen a nominee to oppose him.
But I don't think John McCain would have been the beneficiary. McCain came reasonably close to running with Kerry in 2004; I can't imagine he would have turned around and run against his friend four years later. In fact, I'm not sure he wouldn't have joined Kerry's administration as Secretary of Defense or something. So you would have had a different Republican nominee in 2008, running against a charisma-deficient incumbent who'd barely won four years earlier (and might well have been a popular vote loser: a switch of 50,000 votes in Ohio would have gotten Kerry the White House even though he was down a couple million votes nationally), burdened by the economy having crashed on his watch.
Presumably we would have had the same set of Republicans running in 2008 as we actually did, minus McCain (who, lest we forget, was far from an inevitable nominee: he almost dropped out in the summer of 2007, and benefitted from the demolition derby of Huckabee, Romney, Giuliani and Thompson through the early set of primaries). So the nominee likely would have been either Huckabee or Romney, the runners-up to McCain, and that guy would have gone on to beat Kerry, quite possibly in a landslide. (An interesting scenario would have been W. looking for a rematch in 2008, but I don't think he would have been nominated again after losing.)
But then what? I don't doubt the Republicans would have done some stimulus, as Obama did--but given their ideological disinclination toward Keynesian policy solutions and tax cut fetish, likely it would have been smaller and even more tilted toward the cuts which were the least effective component of the 2009 American Recovery and Reinvestment Act. So the response very likely wouldn't have been effective, and the Republicans probably would have had a harder time blaming Kerry than the Democrats have on Bush--because you would have had a one-term Democratic president and likely continued Republican control of Congress this whole time. Kerry likely would have interpreted his victory as a mandate to draw down more quickly in Iraq, taking that issue off the table and likely ensuring that control of Congress never flipped in 2006. (It's very possible that the Democrats would have taken control in 2010, creating a political dynamic in alt-2012 similar to that in real-world 2008.)
Since the incumbent, John Kerry, would have had the 2008 Democratic presidential nomination, the actual '08 contest would have been pushed back four years. Romney or Huckabee (Romnuckabee!) is running against one of Hillary Clinton, Barack Obama or John Edwards, the former Vice-President in this scenario who's likely tainted by his prominence in the failed Kerry administration in addition to whatever else he might have gotten up to over the eight years.
My guess is that in this alternate if-Kerry-won-in-'04 universe, Hillary would have been the 2012 nominee. Part of why Obama won in real-2008 was his newness and fatigue with sixteen years of Clinton/Bush; neither factor would have been as strong in a world where he was in his second Senate term and no Clinton or Bush had been in the presidency for eight years. But I do think he would have run, and likely would have come the closest to unseating Hillary--enough to have been asked to join the ticket. He's still just 51, with plenty of time to run in his own right in 2020 or 2024 backed by whatever the Clinton political machine looks like at that point and boasting executive branch experience. So we'd be looking at an election in six weeks' time that would see a Clinton/Obama ticket take the presidency, likely with a mandate to implement fairly strong economic policies.
Needless to say, there are a ton of unknowables in this scenario: how Kerry would have done in disentangling us from the mideast wars, whether the Republican president might have gotten us into new wars between 2008 and 2012 (given his comments this year, the thought of Romney in office during the Green Revolution and Arab Spring is unsettling to say the least), how the Supreme Court might have evolved with Kerry rather than Bush replacing Rehnquist and Souter, and Romnuckabee rather than Obama replacing O'Connor and Stevens... or for that matter whether the ones who are still alive would have left with a president of the other party in office. But it's an interesting line of speculation, to me at least.