The 2008 presidential race is in full swing.

The first test of who’s up and who’s down is what this author refers to as “show me the money.”

Leading the pack for Democrats is Sen. Hillary Clinton with about $26 million, some of which will have to be used for the general election, then Barack Obama with $25 million, former Sen. John Edwards with $14 million, and Gov. Bill Richardson with a surprising $6 million.

In the lead for the GOP is former Massachusetts Gov. Mitt Romney with $23 million, followed by Rudy Giuliani with $15 million ($10 million of which he raised in March alone), and trailing the pack , Sen. John McCain of Arizona with $12.5 million.

The “money race” is a good indicator of whom the insiders are betting on and it is also important because the primaries have become front-end loaded.

It is conceivable, because of the acceleration of the primary process, that both parties will have chosen their nominee by mid-February 2008.

Which now brings us to handicapping the race.

Although among the general electorate Clinton is seen as unelectable by almost 45 percent of the American public she is clearly the favorite of the Democratic Party. Without a doubt, Bill Clinton is one of the smartest strategists on the American political landscape today.

Together the Clintons have the best network of fund-raisers and activists of anybody in either party.

Look for Obama to make a good run for the gold but to come up short. It is highly likely that Obama might be the Democratic vice presidential nominee. That would set up a historic first, with the first woman to lead a ticket and the first black to run as the vice presidential nominee.

Republican and conservatives should not discount the potential power of that one-two punch.

On the Republican side the eventual nominee might still have to deal with the war in Iraq. Make no mistake about it, the Democrats will try to make the general election a referendum on George W. Bush’s presidency.

Competency will be the operative phrase in the 2008 presidential race.

Many of my conservative brethren are surprised that Rudy Giuliani continues to lead the pack among Republicans and with the American public. They point out his views on social issues.

What has helped Giuliani is that he is not seen as someone overtly pandering to the right.

One could argue that Giuliani is ahead because he’s viewed as competent and authentic. America instinctively trusts Giuliani because of his handling of the terrorist attack Sept 11.

If he has an Achilles heel, it might be because he has yet to articulate on how he would deal with illegal immigration.

Second in almost all Republican primary polls is McCain. An authentic American hero, McCain has the advantage of having run before in 2000. He has reached out and tried to mend fences with both social and fiscal conservatives. Other than Bush, McCain is the politician most associated by the American public with the war in Iraq.

He is also seen as a Washington DC candidate, which, I believe, is a negative in this election cycle.

Which brings me to Romney. Romney is leading in the money game, not from Washington, but is fourth in most polls.

Romney is camera-ready, but he has a huge credibility problem with many social conservatives, which might work against him, particularly in the Bible Belt of South Carolina.

On the bench and not yet in the game are Former Sen. Fred Thompson of Tennessee and former Speaker of the House Newt Gingrich.

Both are well-respected by conservatives, some seeking a candidate in the mold of Ronald Reagan.

As I said earlier, authenticity and competency will be the real issues in ‘08. If the race becomes a referendum on Iraq and the Bush presidency then, most likely Republicans will lose.

Should the Republican nominee outline real solutions and real change for the problems that confront America, the Republicans have a better-than-even chance of winning.

Marc Rotterman is a senior fellow at the John Locke Foundation and a conservative activist.