This story was written by CBSNews.com political reporter Brian Montopoli.
With 50 days left until Election Day, the battle for the presidency may have finally settled on a defining issue. And it has nothing to do with lipstick.
The collapse of financial industry titans Lehman Brothers and Merrill Lynch and subsequent stock market crash, just the latest pieces of bad economic news in a year that has been dotted with grim headlines, have forced the campaigns of and to put aside some of the more trivial aspects of the campaign and try to cast their candidate as most prepared to properly guide the economy.
"The issue is fraught with peril for both of them," said CBS News consultant and political strategist Joe Trippi. "Particularly with financial markets, you don't score points by creating panic. That's not what a presidential candidate does."
"You can make an alarmist statement and trigger an even bigger fall than is occurring," he continued. "Or you can go the way McCain did, which is try to help calm the markets, and be accused of not understanding how perilous the times are."
On Monday, McCain, who once famously acknowledged that economic issues are not his strong suit, said that "the fundamentals of our economy are strong." The Arizona senator also stressed that "these are very, very difficult times" and released an ad stating flatly that the economy is in crisis. But McCain's characterization of the underlying fundamentals as "strong" immediately became fodder for an Obama campaign eager to cast the Republican nominee as out of touch.
"Today of all days, John McCain's stubborn insistence that the 'fundamentals of the economy are strong' shows that he is disturbingly out of touch with what's going in the lives of ordinary Americans," Obama spokesman Bill Burton said in a statement. "Even as his own ads try to convince him that the economy is in crisis, apparently his 26 years in Washington have left him incapable of understanding that the policies he supports have created an historic economic crisis."
"He says that we've made great progress economically, in the Bush years," Democratic vice presidential nomineeadded in Michigan on Monday. "Ladies and gentlemen, I could walk from here to Lansing, and I wouldn't run into a single person who thought our economy was doing well, unless I ran into John McCain."
Tuesday morning, the Obama campaign released an ad called "Fundamentals" hammering home the point.
In an email to reporters, the McCain camp noted that New York mayor and former Wall Street businessman Michael Bloomberg agrees with McCain. Bloomberg told Politico that "fundamentally America has an economy that is strong," adding, "I'd rather play America's hand than any other country."
Obama cast the news in dire terms Monday, calling the situation "the most serious financial crisis since the Great Depression." In an effort to link the Wall Street turmoil to the problems of average Americans, he suggested it hampered the economy's "ability to create good-paying jobs and help working Americans pay their bills, save for their future, and make their mortgage payments."
Most voters likely do not understand the specifics of what, exactly, led to Wall Street's woes. "Just understanding the problem just about requires a PhD in finance," Republican strategist Whit Ayers said.
But they are undeniably pessimistic about the state of the economy. In a CBS News poll released last month, 83 percent of respondents said the economy is in bad shape. The issue is hitting home: Asked to identify the issue most important to them, 40 percent of respondents in an August poll pointed to the economy and jobs, far more than any other topic.
Both candidates are calling for greater regulation and transparency of the markets as well as consolidation of regulatory oversight boards, and both opposed a government bailout of Lehman Brothers. But according to Barry Bosworth, an economic expert at the Brookings Institution, Obama tends to favor a greater government role than McCain and has a "much greater interest" in more active regulatory oversight.
Bosworth notes that both parties now have "strong ties" to Wall Street firms, complicating efforts at significant reform.
"It's going to be a problem," he said.
The McCain campaign is pushing the notion that McCain and running mateare Washington outsiders who can solve Wall Street's problems: Palin suggested on Monday in Colorado that Washington has been "asleep at the switch." She said the Republican ticket is "going to put an end to the mismanagement and abuses on Washington and Wall Street that have resulted in this financial crisis."
That message is complicated by the fact that the man at the top of the ticket has been in Washington, as the Obama camp likes to point out, for more than 25 years. But Obama has problems of his own selling a message of economic competence: A CBS News poll this month found that 41 percent of Obama supporters with reservations cite his level of experience as their biggest concern, and voters facing economic hardship may be less willing to support a candidate who is relatively new to the national scene.
Obama looked to counter those concerns Monday by hammering home his campaign's criticism of McCain's suggestion that the fundamentals of the economy are strong.
"What's more fundamental than the ability to find a job that pays the bills and can raise a family?" Obama asked in prepared remarks. "What's more fundamental than knowing that your life savings is secure, and that you can retire with dignity? What's more fundamental than knowing that you'll have a roof over your head at the end of the day? What's more fundamental than that?"
Ayers suggested that the candidate says something clear and compelling about how to stabilize the economy will have the upper hand on the issue.
"The challenge is for a candidate to come up with something that is sufficiently different and persuasive and compelling that will capture people's attention," Ayers said. "In a contest between the simple and easy to understand and the complex and difficult to understand, simple and easy always wins."
By Brian Montopoli