"Money is the mother's milk of politics." It was true in the 1960s, when those wry words were uttered by Jesse Unruh, the legendary speaker of the California Assembly. And it's even more true today, given the ever-soaring cost of TV political advertising. That's why with each election cycle, we ask our investigative reporters Michael Isikoff and Mark Hosenball to "follow the money." In the '90s, Mike and Mark broke several major stories about Bill Clinton's questionable fund-raising practices. And in 2000, they were among the first reporters to call attention to the growing use of a loophole in Section 527 of the tax code that allows nebulous activist groups to skirt "soft money" scrutiny and run political ads without revealing their donors ("The Secret Money Chase," June 5, 2000). But for all NEWSWEEK's commitment to covering the money game, even we couldn't have predicted how big a factor "527s" would become in this year's race.

As Isikoff, Hosenball and Holly Bailey report this week, these once mostly conservative vehicles are now surfacing on both sides to fuel a campaign that's become the most expensive in U.S. history--and among the nastiest. While both candidates have denied responsibility and professed outrage, pro-Bush 527s have slimed John Kerry as a phony military hero and unpatriotic hippie, while pro-Kerry groups have mocked the president as a pampered National Guard no-show. Just as important, but less reported, 527 money is fueling unprecedented--and possibly decisive--voter-registration and mobilization efforts across the country. While the cover story looks at what's legal and what's not and who's behind these stealth PACs, Howard Fineman assesses the effect they've had on the dynamics of the election. And Jonathan Alter laments the real cost of the slime wars: how they've detracted from debate about real issues.

Iraq was back in the headlines last week as we reached the sad milestone of 1,000 Americans dead since the war began. But as Scott Johnson and Babak Dehghanpisheh report, the reality on the ground looks even grimmer, with the number of insurgents rising and the amount of territory controlled by U.S. and Iraqi forces still perilously small. Debra Rosenberg checks in on the latest developments in the battle against OxyContin abuse, a crisis she first helped spotlight more than three years ago (April 9, 2001). And Marc Peyser rates the best and worst of the new fall TV season, a roster full of predictable duds and rip-offs--and a few surprising gems.