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With McCain on the wrong side of the issues and trailing badly in the polls, he is prepared to go even more negative in the hopes of pulling out a victory in November. This will include raising Obama’s ties to Ayers and Rezko even though these smears have previously been debunked.

Having learned from seeing such attacks used against John Kerry, Obama is responding by launching a preemptive attack with this ad:

“Three quarters of a million jobs lost this year. Our financial system in turmoil. And John McCain? Erratic in a crisis. Out of touch on the economy. No wonder his campaign wants to change the subject.

“Turn the page on the financial crisis by launching dishonorable, dishonest ‘assaults’ against Barack Obama. Struggling families can’t turn the page on this economy, and we can’t afford another president who is this out of touch.”

In addition to the ad, Obama has given surrogates an ok to go after McCain for his association to Charles Keating and involvement in the Keating 5 Scandal. Marc Ambinder notes other associations which might be harmful to McCain:

A senior Democrat who has had contact with Obama’s high command points to Democratic strategist Paul Begala’s comments on this morning’s Meet the Press.

Begala noted that McCain once “sat on the board of a very right wing organization,” the U.S. Council for World Freedom, led by a retired Army Maj. General named John Singlaub. The Anti-Defamation League allegedly called the CWF’s parent organization a gathering place for racists and anti-Semites.

Said Begala: “Now, that’s not John McCain. I don’t think he is that. But, but, you know, the problem is that a lot of people know John McCain’s record better than Governor Palin, and he does not want to play guilt by association or this thing could blow up in his face.”

Other potential negative associations for McCain are his long-time South Carolina consultant, Richard Quinn,  a publisher of a Southern heritage magazine, and John Hagee, a pastor whose endorsement McCain solicited and later rejected.

Obama is also counterattacking on the stump:

Sen. Barack Obama on Sunday charged that Sen. John McCain’s campaign is launching “Swift boat-style attacks” on him instead of addressing the country’s problems.

“Sen. McCain and his operatives are gambling that they can distract you with smears rather than talk to you about substance. They’d rather try to tear our campaign down than lift this country up,” Obama said at an event in Asheville, North Carolina.

“That’s what you do when you’re out of touch, out of ideas, and running out of time,” he said.

The comments come a day after Alaska Gov. Sarah Palin, McCain’s running mate, claimed that Obama associated “with terrorists who targeted our own country.”

In return the Republicans are searching out yet more associations to use to smear Obama. Nate Silver compares this strategy to that of a football team which must resort to desperate measures despite the fact that odds are against them working:

It is a sad denouement for what was one to be a high-minded campaign focused around themes of honor and reform (themes that were resuscitated briefly during the Republican Convention), possibly accompanied by McCain’s taking a one-term pledge. It is also, however, Mr. McCain’s strategists would seem to have concluded, their only remaining hope.

I am not here to dispute that this is McCain’s best strategy — in the same way that an onside kick is a team’s best strategy when it trails late in the game with no timeouts left. But like the onside kick, it is fairly unlikely to work.

The problem for McCain is that resorting to this type of attack further damages the impression that McCain is different from other Republicans. Just as dirty attacks from Hillary Clinton backfired and helped Obama win the nomination, such dirty attacks from McCain will further demonstrate to voters that change is needed in politics, leading more independents to back Obama. Even Hillary Clinton was careful about using attacks based upon Rezko and Ayers, leaving much of this to the media. If less offensive attacks by Clinton backfired against her, there is a far greater chance that these attacks will harm McCain more than they will harm Obama.

Having announced to the media that this is his strategy will make it even more likely to succeed, and raises further questions as to the competence of McCain’s campaign. In recent years Republicans have been incompetent at governing but highly skilled at launching Swift Boat attacks. Currently McCain appears to be incompetent at both matters of public policy as well as at launching Republican smears despite turning to Karl Rove staffers.