Obama accuses McCain of smear campaign

ASHEVILLE, North Carolina (Reuters) – Democrat Barack Obama counterattacked on Sunday against a new Republican tactic by saying rival John McCain was more interested in a smear campaign than fixing the U.S. economy.

With McCain losing ground in opinion polls, a campaign strategist was quoted as saying the Republican presidential candidate needed to "turn the page" on the economic issue and make the election about Obama’s experience and character.

That effort started on Saturday when Republican vice presidential candidate Sarah Palin accused Obama of "palling around with terrorists" in reference to his acquaintance with Bill Ayers, a former member of the Vietnam War-era militant Weather Underground.

Obama came back at the Republicans at a rally in Asheville, North Carolina, a swing state where the Democratic presidential candidate was preparing for his second debate with McCain on Tuesday.

"Senator McCain and his operatives are gambling that he can distract you with smears rather than talk to you about substance," Obama said in prepared remarks. "They’d rather try to tear our campaign down than lift this country up."

"It’s what you do when you’re out of touch, out of ideas and running out of time," he said a month before the November 4 election.

Obama’s improvement in the polls was fueled by the public’s perception that he can best handle the ailing economy. The Illinois senator tried to keep the focus on the economy and used the "turn the page" quote as a way of keeping the issue alive.

"We’re facing the worst economic crisis since the Great Depression, and John McCain wants us to ‘turn the page?’" he said in the Asheville remarks.

The tougher tone comes as McCain struggles to move the theme of the election away from the economy, an issue that has helped Obama build leads in key states, including several won by Republicans in the last presidential election in 2004.

Obama spokesman Hari Sevugan said, "Today, the McCain-Palin team took their discredited, dishonorable campaign one desperate step further, announcing that they were going to try ‘turning a page on this financial crisis’ and launching more personal attacks on Senator Obama."

"Instead of offering solutions for working Americans and families struggling through a failing economy, they have offered more gutter politics and false attacks," he said in a statement.

‘BALD-FACED LIE’

Speaking at a fundraiser in Asheville, North Carolina, on Saturday night, Obama made no direct reference to Palin’s remarks but told supporters he would continue to run a positive campaign.

"Most of all (people) are tired of the politics of distraction, the politics of division … that says that the way to win an election is simply to run nasty ads and lie about their opponents," he said.

Obama served with Ayers on the board of a foundation in Chicago, and has said he was only 8 years old when the Weather Underground committed its best-known bombing. He has also noted that former President Bill Clinton pardoned two members of the group during the last days of his presidency.

Earlier, McCain’s campaign called Obama a bald-faced liar in reference to how he characterized the Republican’s plan to reform health insurance.

"When you read the fine print, it’s clear that John McCain is pulling an old Washington bait and switch. It’s a shell game," Obama said of McCain’s plan to reform health insurance.

But Democrats responded that the Republicans were just trying to trivialize the race and take the spotlight off McCain and the economy."

"How ridiculous," Democratic Sen. Claire McCaskill of Missouri said on Fox. "American people deserve so much better."

"You have seen a 26-year Senate veteran morph into an angry, desperate candidate in the last few weeks, especially in the last few days," Democratic Sen. Sherrod Brown of Ohio told ABC. "And it just kind of makes me sad … that John McCain and Sarah Palin are resorting to these tactics."