Obama and McCain spar as campaign enters final month

NEWPORT NEWS, Virginia (Reuters) - U.S. Republican presidential candidate John McCain's campaign called his Democratic opponent Barack Obama a bald-faced liar on Saturday as the two sides traded barbs over reforming health insurance.

After a week where congressional negotiations over a $700 billion (396 billion pounds) financial rescue package dominated the campaign, Obama used a rally in Virginia to refocus the political discourse on health insurance.

Health insurance is an emotive issue with voters ahead of the November 4 election, with some 45 million Americans living without coverage and others worried about losing coverage if they lose their jobs in the economic slump.

"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.

"He gives you a tax credit with one hand but he raises your taxes with the other," the senator from Illinois told a crowd of about 18,000 supporters.

McCain's campaign shot back.

"Barack Obama is lying to voters," McCain spokesman Tucker Bounds said in a statement. "It's a bald-faced lie."

Both campaigns say they will improve access to health insurance and make care more affordable. On Saturday, both campaigns derided the other's plan as "radical."

The sharp exchange came as the more than year-long campaign enters the last month before the election.

New polls show Obama has solidified his national lead and gained an edge in crucial battleground states in recent weeks as the Wall Street crisis focussed the attention of voters on the economy.

Now, McCain and Obama want to bring voter attention back to their policies and how their visions for America differ.

McCain and Obama will get to talk in person about health insurance and other issues on Tuesday when they meet for the second of three nationally televised presidential debates, this one in Nashville, Tennessee.

NO QUICK FIX

With expectations high that the U.S. crisis, which has created turbulence in global financial markets, might tip the world's richest economy into recession, President George W. Bush said Americans should not expect a quick fix.

"My administration will move as quickly as possible, but the benefits of this package will not all be felt immediately," Bush, a Republican whose two terms in office will end in January, said in his weekly radio address.

Responding for the Democrats, Ohio Gov. Ted Strickland said the loss of 760,000 U.S. jobs so far in 2008 showed that ordinary people had felt the pinch of a slowing economy all year and likened McCain to Bush.

"John McCain just doesn't get it. He hasn't said one thing he'd do to make his economy look any different than George Bush's economy," Strickland said.

In Colorado, Republican vice presidential nominee Sarah Palin said she was not concerned about polls showing McCain trailing Obama in many battleground states, including several won by Republicans in the last presidential election in 2004.

Joking that the "heels are off," Palin launched into an aggressive assault on Obama, accusing him of "palling around with terrorists" and calling him an embarrassment.

She cited a New York Times story on Saturday examining Obama's relationship with Bill Ayers, a former member of the Vietnam-era militant Weather Underground organisation who is now a professor at the University of Illinois at Chicago. The Times concluded they were not close.

"Our opponent though is someone who sees America, it seems, as being so imperfect, imperfect enough that is he palling around with terrorists who would target their own country?" Palin told a fund-raiser in Englewood, Colorado.

Recent polls show McCain, an Arizona senator, in a dogfight in Ohio, Florida, Virginia, North Carolina, Colorado, Missouri and Indiana. All were won by Bush in 2004 and McCain cannot afford to lose them as he tries to piece together the 270 electoral votes needed to capture the White House.

Palin, the governor of Alaska, said she would like the chance to campaign in Michigan, won by Democrat John Kerry in 2004, after McCain announced on Thursday he was pulling staff and advertising from the Midwestern state for the final push to the November 4 election.

(Additional reporting by Jason Szep in Colorado and Jeff Mason in Arizona; Editing by John O'Callaghan)

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