Democrats eat into McCain's lead as Palin's halo starts to slip

There were growing signs yesterday that the "Sarah Palin effect" is starting to wear off and that the Republican candidate, John McCain, has peaked.

Democrats took heart from four national opinion polls which show that despite the bounce caused by interest in Mrs Palin, Mr McCain now leads by an average of just 1.6 points, his smallest margin since the Republican convention.

The latest polls come amid a flurry of critical news reports into Mrs Palin which cast doubt on some of her claims to be a squeaky clean reformist. Senator McCain's claims that his running mate had not sought special interest funding from Congress have been shown to be wrong.

It emerged yesterday that she had asked the US to fund $453m worth of projects in oil-rich Alaska for the past two years. Among the requests was $4.5m for an airport serving fewer than 100 people on a Bering Sea island and $9m to help Alaska's already hugely profitable oil companies.

Democrats mocked the Alaska governor as "an earmark queen". The disclosures come on top of evidence that her administration also held on to more than $500m in federal funds for a much-derided "bridge to nowhere" which she maintains she vetoed. For two weeks the McCain campaign has wallowed in the media's obsession with Governor Palin. A huge bounce in the opinion polls followed, with women especially declaring that they were changing their allegiance because they admired her so much.

But that appears to be changing as the focus of the election turns to the economy, especially in northern states. In Iowa, a poll in the Des Moines Register gives Barack Obama a comfortable lead of 12 points. In traditionally Republican southern states, however, the McCain campaign remains strong (he has a 20-point lead in South Carolina).

In the final weeks of the race for the White House, both sides are stepping up the attack, with events on Wall Street expected to provide the main focus.

A cacophony of news greets voters every day, including video press releases, blogs, and attack ads on television, on top of newspapers and television. The Obama campaign is also spending tens of millions of dollars on advertising in an attempt to dominate the news agenda. The McCain campaign, with less money to spend, relies on cable news channels to give free air time to the attack ads it releases.

The Obama campaign was quick to seize on comments by Mr McCain in Florida yesterday, which it said portrayed him as fundamentally out of touch with voters. Speaking at a "town hall" meeting with supporters, he said that "the fundamentals of our economy are strong" before adding: "These are very, very difficult times and I promise you we will never put America in this position again."

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