Analysis: Economic upheaval shakes up campaign debate

WASHINGTON -- After a week in which the political debate kept coming back to lipstick and pigs, this week's economic implosions have refocused the nation's policy debate and threatened to reconfigure the political landscape.

"We're facing, essentially, an economic 9/11," says Leon Panetta, White House chief of staff and budget director under President Bill Clinton. "Rather than deciding who's wearing lipstick, they're focusing on your basic pocketbook issues."

Last week, newspapers featured a photo of Barack Obama arriving for a taping of the Late Show with David Letterman. Obama's latest starring role on TV is in a two-minute ad laying out his prescriptions for the ailing economy.

Much of the coverage of John McCain's campaign last week centered on his running mate, Sarah Palin. By Wednesday, the talk of the campaign was all about reforming Wall Street.

The renewed attention to the economy gives both candidates a chance to move away from their parties' pasts. For McCain, that means an activist approach to changing Wall Street and Washington, not the deregulation for which Republicans are known. For Obama, it means including tax cuts and energy production in his mix of more liberal salves.

Wednesday, Obama denounced McCain's "eleventh-hour conversion" to the cause of regulation, while McCain promoted his record of government reform and softened his earlier opposition to a government rescue of the American International Group.

The economy was at the top of voters' minds in the latest USA TODAY/Gallup Poll. More than two in three respondents cited an economic issue, including energy or health care costs, as their biggest concern. The cratering of Wall Street titans and its impact on jobs, pensions and portfolios are likely to cement those worries.

"I always thought this was a campaign about the economy," says Doug Holtz-Eakin, McCain's top policy adviser. "In the end, it's about will this disaster on Wall Street roll over and crush the Main Street economy."

Though more talk about the economy may be a good thing for voters, it poses a risk for both candidates: McCain acknowledged early in the campaign that the economy wasn't his strong suit, and Obama has a short economic résumé.