McCain writes off Michigan

Washington - Republican presidential candidate John McCain conceded battleground Michigan to Democrat Barack Obama on Thursday, a major retreat as he struggles to regain his footing in a campaign increasingly dominated by economic issues and a Congressional vote on a huge financial bailout that puts him in a difficult position.

In another sign of McCain's woes, his campaign signalled that it would counter Obama's efforts in Indiana, a state that has not voted for a Democrat since 1964. And, a New Hampshire survey showed the Republican trailing by double digits.

With polls showing Obama leading comfortably in Michigan, McCain's campaign confirmed it was pulling staff and advertising out of the economically distressed state, and one adviser said it was "off the list". The Republican nominee also cancelled a visit there slated for next week. Michigan, with 17 electoral votes, voted for Democrat John Kerry in 2004, but Republicans had poured money into an effort to try to place it in their column this year.

"Operations will be scaled back," said Mike DuHaime, the campaign's political director.

In Indiana, surveys show a competitive race after Obama spent months pouring money into the state and Republicans resisted countering. Now the Republican National Committee is running TV ads to fight for the state's 11 votes, and McCain senior adviser Greg Strimple said: "We're going to go there."

Separately, a Saint Anselm College Institute of Politics poll showed Obama leading McCain 49% to 37% in New Hampshire, a state Kerry narrowly won four years ago and that McCain is hoping to capture.

The Michigan decision marked the first time either McCain or Obama has tacitly conceded a traditional battleground state in a race for the White House with little more than a month remaining.

Troubles with the economy

In a campaign now unfolding across more than a dozen states, the decision means Obama can shift money to other states like Virginia, Colorado and North Carolina where he is trying to eat into traditional Republican territory. McCain's resources were being sent to Ohio, Wisconsin, Pennsylvania, Florida and other more competitive states, and aides said he would try to put Maine into play as well.

The move underscored McCain's troubles with the economy, which he has acknowledged is not his strongest subject, as well as his struggle to beat an opponent who has the money to compete in many states President George W Bush won four years ago. Polls show Obama has pulled ahead or tied McCain in many of those states.

McCain, who has insisted he would veto excessive spending on legislators' pet projects at home, is struggling to explain his vote for the revised financial bailout plan that contained a number of those so-called "earmarks".

In an interview on MSNBC's Morning Joe programme on Thursday, McCain said the extra sweeteners added to the financial bailout bill that passed on Wednesday night in the Senate are "just the way the system is working in Washington, and the reason why it's got to be fixed and it's got to be changed".

McCain has made a career of railing against the concept of so-called pork barrel projects, which are special funding requests that lawmakers tuck into larger bills, to benefit their own districts or states. He even agreed with his interviewer that those types of projects are contributing to the US financial crisis, and said "this bill is putting us on the brink of disaster".

Later in the day, he predicted the resurrected financial bailout bill will pass the House on its second try, but said the $700bn rescue plan is still just a bandage and not a cure.

On the eve of the make-or-break second vote for the bailout package, McCain spoke to several hundred women voters at a town hall meeting in Denver. The night before, he voted for the revised bailout in the Senate.

Chances slimmer in Michigan

"It's like a tourniquet - it will stop the bleeding, then we have to set about fixing the way we do business in Washington, DC," he said.

McCain also criticised Obama and his running mate, Joe Biden, seeking to portray them as taxers and spenders whose policies will cause the country to haemorrhage jobs.

"This is about the Obama-Biden team that will kill jobs with higher taxes and the McCain-Palin team that's going to cut the second highest business tax in the world and create more jobs," McCain said.

While campaigning in Michigan earlier on Thursday, Obama hammered McCain on the same point, saying he's out of touch and doesn't understand the concerns of struggling Americans.

"Nine straight months of job loss," Obama said. "Yet, just the other week, John McCain said the fundamentals of the economy are strong. Well, I don't know what yardstick Senator McCain uses, but where I come from, there's nothing more fundamental than a job."

Republican strategists said McCain's chances were slimmer in Michigan after the Wall Street collapse, and both public and private polls showed him sliding. On Wednesday night, the campaign decided that the one million dollars a week it was spending in Michigan wasn't worth it with internal polls showing Obama approaching a double-digit lead.

- AP