With the Republican vice presidential candidate, Sarah Palin, defending her claim that Barack Obama “pals around with terrorists” and saying his association with a 1960s radical is an issue “fair to talk about”, there are clear indications that the 2008 presidential race has entered its ugliest and most rancorous phase.

During the course of a fundraising swing in California, Palin promised a crowd of 1,300 Republican supporters in Burlingame that John McCain is ready to get tough and “lay out the truth” about the ‘real” Barack Obama.

In fact, Palin appears to have intensified the negative attacks launched on Obama of late - in which she accused him of being “less than truthful” about his relationship with Bill Ayers, the former member of the Weather Underground radical group. This signals a new strategy by McCain’s campaign to go after Obama’s character.

As she boarded her plane in Long Beach, California, Palin said: “The comments are about an association that has been known but hasn’t been talked about. I think it’s fair to talk about where Barack Obama kicked off his political career, in the guy’s living room.”

During her stop in California, Palin was questioned about an Associated Press analysis that said her charge about Ayers was unsubstantiated, and the criticism carried a “racially tinged subtext that McCain may come to regret.” Palin responded: “The Associated Press is wrong,” and argued that the issue had not been adequately discussed.

Meanwhile, Obama’s team in their counterattack has said that McCain is resorting to ‘Swiftboat’ efforts born of desperation and declining polls. Obama himself dismissed the criticism by Palin as “smears” meant to distract voters from real problems such as the troubled economy.

Furthermore, the Democratic campaign has released a new 30-second ad calling McCain “erratic in a crisis, out of touch on the economy”, and alleging that he has resorted to “dishonest, dishonorable assaults on Barack Obama.”