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Republican vice presidential candidate Sarah Palin tells audiences the election is about the “truthfulness and judgment” needed to be president. But the Alaska governor often stretches the truth herself.

She has exaggerated the nature of Barack Obama‘s personal ties to a former 1960s radical and falsely claimed the Democratic presidential candidate plans to raise most people’s taxes.

On Tuesday, she tried rebutting the Illinois senator’s criticisms of Republican presidential candidate John McCain over health care and Social Security. She said Obama was misleading and wrong, but she herself told less than the full story.

To be sure, most of Palin’s assertions about Obama echo claims McCain himself has made or lines from Republican TV ads.

At a rally Tuesday, Palin tried to link Obama to the failure of housing giant Fannie Mae by noting that two Obama supporters once led the troubled company. The government seized Fannie Mae and Freddie Mac, another housing finance company, last month to prevent their collapse from worsening the global credit crisis.

“What’s next, claiming that he didn’t know two of his biggest supporters were running Fannie Mae, the subprime mortgage giant?” Palin said. “That has done harm to the American economy.”

She referred to Jim Johnson, who chaired Fannie Mae from 1991-1998, and Franklin Raines, his successor who stepped down in 2004 in an accounting scandal.

But Palin exaggerated Obama’s ties to Raines and Johnson while omitting any mention of a closer relationship between a top McCain aide and the failed housing giants.

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