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Strategy Memo: Formula 504

Good Tuesday morning. With exactly seven weeks to go until Election Day, we've given up trying to control our email inbox. Here's what Washington is watching today:

-- The House will finally take up a new energy plan to allow at least some offshore drilling, though House Republicans objected late yesterday and called the plan insufficient. The Senate will take a cloture vote on the defense authorization bill, which has taken up the majority of the upper chamber's time since it came back from August recess. President Bush will return to his home state to inspect damage inflicted by Hurricane Ike.

-- Few paid a lot of attention to politics yesterday as the Dow Jones Industrial Average followed other world markets and shed 500 points while Lehman Brothers continued to search out a buyer. The economy hasn't bottomed out and won't any time soon, and voters beginning to feel downright freightened about the situation could force both candidates to focus on little else for the rest of the campaign.

-- The candidates' responses to yesterday's market flux showed two very different approaches, the New York Times' Jackie Calmes writes today. John McCain has taken to calling for a new look at Wall Street regulators who he says were asleep at the switch. Barack Obama spent the day trying to tie McCain to President Bush's economic policies, which he said were to blame for the turmoil.

-- But neither candidate has a perfect record on the economy. McCain has historically supported the kind of deregulation now being blamed for several Wall Street collapses, while Obama's own record falls short of boasting significant achievements. Perhaps the biggest flub came as McCain called the fundamentals of the economy strong, which, though he tried to backtrack and say he meant American workers, will come back to haunt him in the form of a thousand television spots.

-- While voters tuning in lately have heard arguments about who wants to teach sex education to whom and which ads are downright lies, the struggling economy could completely flip the race, writes the Washington Post's Chris Cillizza. The argument in the primary revolved around which candidate was better equipped to answer a serious foreign or security crisis. Now, which candidate can best handle the economy is the question most voters want to see answered.

-- As election day approaches, both McCain and Obama are hopping around to a smaller number of states than they once did. Gone are Obama's chances to win Alaska, and Montana and North Dakota are probably out the window (thanks to Sarah Palin's love of guns, writes the Washington Times' Donald Lambro). Gone are McCain's chances at making a dent in the West Coast. The battleground is the same one we've seen for the past eight years, centering around Ohio, the Upper Midwest and the Mountain West. True, Obama has managed to put Virginia in play, while Democrats have been focusing on Colorado, New Mexico and Nevada for years, but a fundamental shift in the electorate has not happened.

-- Shouldn't that very fact make Obama backers petrified? President Bush's approval ratings are at record lows. Voters disapprove of the war in Iraq and of the president's handling of the economy. More voters plan to cast ballots for Democratic candidates for Congress. And John McCain leads by 1.6 points in the latest RCP Average? Obama has started hitting back, and hard, as the Post's Kornblut and Murray write, and he'll need to continue if he has designs on doing better than just coming close.

-- Dis Of The Day: Barack Obama is unlikely to appear with Senate or House candidates before November, Politico's John Bresnahan reports, and he told Senate Majority Leader Harry Reid he would not share his cash with Senate Democrats trying to boost their tiny majority. Senate candidates can use Obama's name, and the nominee has done four solicitations for the Democratic Senatorial Campaign Committee, but that's the extent to which Obama, locked in a tough race for the White House, will help out.

-- Today On The Trail: Obama is in Golden, Colorado today, the same town in which Republican veep contender Sarah Palin rallied yesterday, inviting the inevitable side-by-side comparisons of crowd size. McCain has a rally planned for Tampa before he flies to Ohio to meet Palin. The two will rally this afternoon in Vienna, Ohio. Joe Biden and wife Jill have a community event planned in Media, Pennsylvania.