Bloomfield Hills, Mich. — How bad is it for Republicans this year? Consider Michigan’s Congressional District 9 in affluent, white-collar Oakland County just north of Detroit, represented for 16 years by Republican Rep. Joe Knollenberg.

Two years ago, Knollenberg survived a tight race as Democrats nationally swept into the House of Representatives to win back the majority they’d lost in 1994. That restored 2006 Democratic majority immediately took aim at the pocketbooks of Knollenberg’s “rich” constituents. Yet, despite Democratic polices that have adversely effected the district’s auto jobs, home values, and taxes, polls blame George W. Bush — not Democrats — for these ills, and the veteran congressman is more vulnerable than ever.

Facing left-wing Democrat Gary Peters, Knollenberg is in the fight of his life just three weeks before Election Day.

Fed by Democratic loosening of Fannie and Freddie Mac’s lending standards (“The match that lit this fire,” as John McCain has put it), the housing market in Oakland — already depressed by the state’s economic recession — has imploded.

Then, last January, the Democratic House effectively put Oakland in its cross-hairs, scapegoating its core auto industry for causing global warning, and passing a 35 mpg-average fuel mileage mandate — a rule loudly opposed by Detroit automakers (though, ironically, supported by McCain) who say the new regulations will cost their industry $85 billion at a time when they are losing market share and laying off waves of white-collar workers (many of them Oakland residents).

Democrat Peters, a former state senator, is best known for railing against “red-lining” — that race-baiting pejorative that liberal Democrats used to employ so frequently to strong-arm businesses into making risky loans. [You don’t hear Democrats complaining about mortgage red-lining anymore: Peters’ bugaboo is auto-insurance red-lining.] Today, Peters has latched onto the coattails of Barack Obama — but their shared platform of hiking capital gains and income taxes offers little economic hope for Michigan’s second richest county. Peters is also closely aligned with Democratic governor Jennifer Granholm, whose approval ratings have plunged to George W. Bush levels following her 17-percent income-tax hike last year in a state with a 9-percent unemployment rate.

Despite Oakland’s grim prospects under a Democratic ascendancy, the incumbent Republican Knollenberg has consistently trailed Peters in Democratic polling. While the Republican’s own campaign has — tellingly — refused to release internal GOP polls, Michigan pollster Steve Mitchell of Mitchell Research today put the race at a dead heat: 43 percent to 43 percent.

Why does CD 9 seem so on the verge of voting against its own economic interests? Political insiders point to demographic changes in a district that includes the heavily black city of Pontiac and wine-and-brie suburban townships like Royal Oak. A source inside the Knollenberg campaign also points to polling that finds that tax issues have lost their edge — replaced by “softer” issues like the environment and abortion rights.

Seizing the moment, Obama and Peters have moderated their economic rhetoric in order to re-assure voters on tax policy while benefiting from the swing to “soft” issues.

“Joe Knollenberg has spent the past eight years backing George Bush’s failed economic agenda and disastrous fiscal policies, and now Michigan families are paying the price,” says Peters’ campaign manager Julie Petrick, hanging the toxic “Dubya” around Knollenberg’s neck. “Gary Peters has a real plan to get Michigan’s economy back on track by cutting taxes for the middle class.”

Never mind that Peters and Obama’s “middle-class tax cut” is a charade at best (and fib at worst). Peters has matched Knollenberg in spending — thanks to buckets of cash from the national party and George Soros — and, like Obama nationally, has benefited from a partisan local media who are shamelessly in the tank for Democrats. The McCain camp’s recent withdrawal from Michigan — Mitchell’s poll has McCain down a whopping 16 points in this key battleground state — has been a further blow to Knollenberg’s chances.

Knollenberg is bitter about McCain’s retreat. Without the benefit of the senator’s visits to raise money — as well as the absence of McCain ads — Knollenberg fears Republican turnout will lag. When McCain’s ticket-mate, Sarah Palin, expressed regret at her own campaign’s surrender in Michigan, Knollenberg jumped at the chance to do an end-run on his own party’s nominee.

“My disappointment over Senator McCain’s decision to not campaign in Michigan was immediately overwhelmed by my excitement upon hearing of your desire to come back to our state,” wrote Knollenberg in an open letter to Palin this month. “Consider this a formal invitation to join me on the trail in Oakland County.”

Though demographic changes in the CD 9 have been anticipated for years — as Detroit’s black middle class emptied out into neighboring Oakland — political insiders here concede that demographics alone cannot explain what is happening in a district that seems poised to vote against its own pocketbook interests.

This year appears to be a “change” election pure and simple. Just as stock markets often behave irrationally, in ways that bely economic fundamentals, this year’s Michigan electorate is being driven by a psychology of change — even if those change agents, by any reasonable assessment, will institute policies that are contrary to voter interests.

A recent Democrat-commissioned Grove Insight survey of likely voters in CD 9 found that 84 percent of respondents agreed with the statement: “things in this part of Michigan are off on the wrong track.”

Voters in a change mood, however, may be surprised to find that, come January, the tax-hiking, Fannie-friendly, auto-bashing candidates they elected were the ones who derailed the train in the first place.

– Henry Payne is a writer and editorial cartoonist for The Detroit News.