By Matt Spetalnick
WAUKESHA, Wisconsin (Reuters) - Down in opinion polls, Republican presidential nominee John McCain pressed his effort to raise doubts about Barack Obama's character on Thursday with a fresh attack on his Democratic rival's contacts with a former left-wing radical who became a college professor.
On a day the stock market took another precipitous drop, the two candidates also bickered over how to resurrect the economy, with Obama taking aim at a McCain mortgage bailout plan that he said would reward banks responsible for the U.S. housing crisis.
Obama is riding an advantage in national opinion polls and in several states that hold the key to the election. He has built a 4-point lead over McCain in Reuters/C-SPAN/Zogby poll released on Thursday.
Trying to turn the tide with less than three weeks to go to the November 4 vote, McCain went on the attack at a joint rally with his vice presidential running mate, Sarah Palin, as well as in a new Web video ad.
His goal was to tie Obama to William Ayers, a founding member of the Weather Underground, a radical left anti-Vietnam War group that bombed the U.S. Capitol in 1971 and the Pentagon in 1972. Ayers spent 10 years as a fugitive and his wife, Bernardine Dohrn, spent time on the FBI's Most Wanted list.
Obama, has called Ayers, now a college education professor, "a guy in my neighbourhood" and said he and Ayers are not close. He told ABC News on Wednesday that McCain is trying to score "cheap political points" by bringing up Ayers.
Ayers in the mid-1990s hosted a meeting at his house to introduce Obama to neighbours during Obama's first run for a seat in the Illinois Senate. They also served on a nonprofit anti-poverty board together.
"We don't care about an old washed-up terrorist and his wife..." McCain said. "That's not the point here. The point is Sen. Obama said he was just a guy in the neighbourhood. We know that's not true. We need to know the full extent of the relationship because of whether Sen. Obama is telling the truth to the American people or not."
A Web video ad released by the McCain campaign shows pictures of Obama and Ayers and said Obama has not told the truth about the extent of his ties with Ayers.
"Americans say, 'Where's the truth, Barack?' Barack Obama. Too risky for America."
Obama spokesman Bill Burton told the Fox News Channel that Obama did not know about Ayers' past when he went to his house and that the candidate found Ayers' radical activities "detestable and deplorable."
ECONOMIC FEARS
"You know, I can talk about it 'til I'm blue in the face, but it doesn't help American voters and American taxpayers understand what's really going on in this race, which is that John McCain, as his campaign has said over and over again, does not want to talk about the economy, because if they do, they lose," Burton said.
Prospective voters were hit with more bad economic news on Thursday as the U.S. stock market plummeted again, reaching its lowest level in five years on fears that frozen credit markets may lead to a global recession.
Obama attacked McCain's mortgage bailout plan at a rally in Dayton, Ohio.
At a debate with Obama in Nashville, Tennessee on Tuesday, McCain proposed the U.S. government buy up troubled loans from people who have seen their home values fall below their debt.
The loans would then be structured into more affordable mortgages. The Arizona senator has called the plan "a critical first step" to get through the crisis.
"We have to act to fix our broken economy and restore the credit markets," Obama said at a rally in Ohio, a state that has gone Republican the past two presidential elections and is crucial to McCain's changes this time.
"But taxpayers shouldn't be asked to pick up the tab for the very folks who helped create this crisis."
The U.S. housing crisis was the seed for the mushrooming Wall Street financial mess that has cost American investors trillions of dollars and put the United States on the brink of a deep recession.
Illinois Sen. Obama, whom polls show is more trusted by Americans on economic issues, dismissed McCain's mortgage plan as not "particularly new" and said he had himself proposed a version of it before McCain as a tool to help homeowners stay in their homes.
McCain defended the plan and said Obama was happy to bail out companies like Bear Stearns and AIG and mortgage giants Fannie Mae and Freddie Mac "but he's opposed to us helping the homeowners of America."
The Obama campaign has purchased a half hour of TV time on NBC and CBS on October 29, six days before the election. The campaign has also reached a deal with Fox for a similar slot if the network is not broadcasting a World Series baseball game that night, according to Linda Douglass, senior advisor to Obama.
(Additional reporting by Caren Bohan; Writing by Steve Holland; editing by David Wiessler and Chris Wilson)
