Polls showed Democrat Barack Obama regaining a slight lead over Republican John McCain as the battered U.S. economy looked Thursday to be intruding on an American presidential election as deeply as any since the Great Depression of the 1930s.
The U.S. economic free fall was playing havoc with McCain's campaign, as he battled to distance himself from the unpopular Bush administration while walking away from his own record as a champion of corporate deregulation. Aides accused Obama of trying to use the crisis for political gain.
Barring a stunning turnaround, the next U.S. president will take office facing more turmoil in the financial sector than the country has seen since Democrat Franklin D. Roosevelt took over the White House 75 years ago.
The latest CBS News-New York Times national survey showed Obama leading McCain by a margin of 48 percent to 43 percent — a swing of seven percentage points in just a week. The poll also found Americans believed Obama was more likely than McCain to bring needed change to Washington by a 65-to-37 percentage-point margin.
The latest Gallup Poll daily tracking survey also showed Obama with an edge of a slim 2 percentage points, within the margin of error.
McCain aides claimed Thursday that Obama and his advisers are exploiting Wall Street's financial problems.
Aide Steve Schmidt, who worked for the Bush-Cheney team in 2004, told reporters aboard McCain's plane that Obama is "cheerleading this crisis."
He said McCain is seeking a bipartisan solution although Schmidt and aides Mark Salter and Nicole Wallace also said Democratic congressional leaders should be condemned for considering adjourning without addressing the bankruptcy of Lehman Brothers, the sale of Merrill Lynch and the emergency government loan to insurer AIG.
American voters' No. 1 concern in this election, despite protracted wars in Iraq and Afghanistan, is the economy. And as the stock market plummets and American financial giants go out of business or find themselves struggling to survive, McCain's post-convention bounce — mainly driven by his surprise pick of Alaska Gov. Sarah Palin as the party's first female vice presidential nominee — has vanished.
McCain found himself in a particularly difficult spot Wednesday as the bellwether Dow Jones Industrial Average fell nearly 450 points — slightly more than 4 percent and the second huge loss this week — after an $85 billion government bailout of the world's largest insurance companies, American International Group Inc. McCain had vigorously opposed the bailout just hours before it was announced.
The move by the Federal Reserve, the U.S. central bank, forced McCain to quickly retool his message from one of opposition to a grudging acceptance and acknowledgment that the government had acted to protect millions of Americans from further financial hardship.
McCain said during the primary campaign — and likely to his regret — that he was not as well versed on economic issues as he would like. The 72-year-old former Vietnam prisoner of war has also been closely tied to President George W. Bush, whose popularity is at near record lows and will most likely fall further under the weight of the economic slide.
Obama, who appears to have regained his focus in the White House contest, was hitting McCain hard as a product of a Republican drive over recent decades to deregulate the financial markets, moves that the first-term Illinois senator blamed for the mounting damage to the U.S. economy.
In Elko, Nevada, a rural mining community, Obama mocked McCain's response to Wall Street's meltdown.
"Yesterday, John McCain actually said that if he's president he'll take on — and I quote — `the old boys network in Washington.' I'm not making this up," Obama said. "This is somebody who's been in Congress for 26 years, who put seven of the most powerful Washington lobbyists in charge of his campaign.
"And now he tells us that he's the one who's going to take on the old boys network," Obama said. "The old boys network. In the McCain campaign that's called a staff meeting. Come on."
While McCain was forced to retreat on his opposition to the Federal Reserve bailout, re-calibrating his remarks about the lifeline tossed to AIG, he called for an investigation to uncover any wrongdoing.
"The government was forced to commit $85 billion," McCain said in a statement. "These actions stem from failed regulation, reckless management and a casino culture on Wall Street that has crippled one of the most important companies in America."
On Thursday, Obama was campaigning in New Mexico, a battleground state he hopes to put in the Democratic column, while his wife Michelle was appearing in North Carolina, another swing state. Delaware Sen. Joe Biden, No. 2 on the ticket, was traveling across economically hard hit northeast Ohio — a state which could determine which candidate takes the White House.
Biden told ABC's "Good Morning America" Thursday that paying more in taxes is the patriotic thing to do for wealthier Americans. In a new TV ad that repeats widely debunked claims about the Democratic tax plan, the Republican campaign calls Obama's tax increases "painful."
Under the economic plan proposed by Democratic presidential candidate Barack Obama, people earning more than $250,000 a year would pay more in taxes while those earning less — the vast majority of American taxpayers — would receive a tax cut.
McCain and Palin were making stops in Iowa and Wisconsin, the midwestern U.S. state where most polls show the contest narrowing.