Donors back Obama with record sums amid panic over Palin

Barack Obama raised a record $66m (£37m) in August, thanks to half-a-million new donors excited by his historic acceptance of the Democrat nomination for president and a late spike when his opponent, John McCain, picked the ultra-conservative Alaskan governor Sarah Palin as his running-mate.

Palin Power is continuing to send a high voltage through the campaign, and the governor made her first solo appearance on the stump over the weekend, after successfully avoiding traps laid in her first television interview since bursting on to the national stage.

Speaking for 20 minutes to a crowd of 3,500 in Nevada, Mrs Palin led the audience in a chant of "Drill, baby, drill" – referring to Republican plans to step up oil drilling to help bring down petrol prices – and then was mobbed for autographs.

A re-energised Republican base even has hopes of retaining control of the House of Representatives in November, in a sharp reversal of fortune. Conservative voters had previously been wary of Mr McCain's centrist stance on abortion and other ethical issues, despite his move to the right during the campaign, but Mrs Palin's religious convictions has helped sway them and these voters now say they are much more likely to turn out on 4 November.

But the game-changing appointment of Mrs Palin has also energised Democrat donors, and the spike in contributions continued into September, according to the Obama campaign. Official August figures will not be available until later in the month, but a spokesman confirmed the record $66m yesterday.

Mr Obama's fundraising prowess led him to decline traditional public financing for the campaign, which would have totalled $84m over the next two months. He is likely to raise more than that, but will have to dedicate some time to fundraising events.

While the media continued to pore over Mrs Palin's record in Alaska, Democrats attempted in vain to shift the focus of the race back to the contrasts between Mr Obama and Mr McCain. At campaign stops over the weekend, Mr Obama and his running-mate, Joe Biden, avoided attacking her. Their initial attacks on her relative inexperience – she is a first-term governor and former small-town mayor – have backfired spectacularly, allowing her to press her theme that she is a "hockey mom" in tune with Middle America.

The choice of Governor Palin has enabled Mr McCain to close the "enthusiasm gap" with Mr Obama, which Republican advisers told him was dooming his chances of victory in November – and imperilling the party's nominees in scores of congressional battles.

Just two weeks ago, after Mr Obama accepted his party's nomination in front of a crowd of 84,000 supporters in Denver and a 38 million-strong television audience, Democrats believed they were headed for an election sweep that would leave them in control of both houses of Congress and the White House – a powerful combination that would enable them to push through a mainstream liberal agenda. Some even dared to hope to increase the Democrat majority in the Senate from 51-49 now to above 60, enough to overrule a presidential veto.

Those most optimistic projections appear to have collapsed, and polls that showed double-digit leads for Democrats have narrowed. Gallup's latest "generic ballot", which asks people about their party preference, puts the Democrats on 48 per cent to the Republicans' 45 per cent among those certain to vote. Add in likely voters, and Republicans could regain control of the lower House of Representatives.

"We have had a disgruntled base that Sarah Palin has clearly ignited," said Senator Robert Bennett, a Utah Republican. "The McCain campaign ... has suddenly become exciting." At a Values Voters summit in Washington, its 2,000 participants, largely from the Christian right, expressed new enthusiasm for the McCain campaign because of Mrs Palin.

The New York Times continued its reporting on Mrs Palin's record in Alaska, revealing yesterday she had given the $95,000-a-year directorship of the Alaska Agriculture Division to a high school classmate, Franci Havemeister. The report said Mrs Palin, claims to be an enemy of "good ol' boy networks", but had also hired four other classmates.