* Weak U.S. dollar sparks debate over American image
* Dollar fuels political gripes about Obama
* Softens impact of U.S. recession, helps tourism, exports
By Michelle Nichols
NEW YORK, Oct 15 (Reuters) - A weak U.S. dollar is drawing tourists to the United States and complaints from Sarah Palin and other conservatives who say it's hurting the country's image as a world power.
"One of the psychologically most interesting things is we think it gives people license to actually go over the edge to make the decision to come to New York," said George Fertitta, head of New York City's marketing and tourism organization.
NYC & Company expects the number of international and domestic tourists to the city to be down about 5 percent in 2009 compared to last year, but the dollar was helping cushion the effects of the recession, said Fertitta.
"Retailers are seeing a resurgence of international visitors spending more," he said.
Last month U.S. retailers posted their first monthly sales increase in more than a year, inching up 0.6 percent compared with expectations for a 1.1 percent decline.
"Maybe we have spent a little more money (than we would have)," said German tourist Elizabeth Rammler, 51. "It was nice for us but it didn't affect our decision to come here. We would have come anyway."
As the U.S. dollar index, which measures it against a basket of currencies, hit a 14-month low at one point on Thursday, other Americans said they were worried.
Honey Marques, an organizer with the conservative Tea Party Patriots in Scottsdale, Arizona, said a weak dollar would dent American self-esteem.
"It's going to cause a serious depression in our country," she warned. "The economy is going to collapse and then we're screwed, that's a big deal."
PALIN WEIGHS IN
For U.S. farmers, a weak dollar can boost export sales of wheat, corn, beans or other commodities.
U.S. Wheat Associates head Alan Tracy said his organization, which markets U.S. wheat to buyers around the world, has been playing up the opportunity. "We've been using it as a kind of marketing tool," said Tracy.
U.S. wheat export sales reached a marketing year high for the week ending Oct. 8, with buyers ordering 767,300 tonnes, up 43 percent from the previous week.
But Palin, last year's Republican vice presidential nominee, criticized the dollar on her Facebook page while commenting on reports that Gulf Arab states were in talks with France, Russia, China and Japan to replace the dollar with a basket of currencies to price oil.
Saudi Arabia, Russia and France denied the reports, but the former Alaska governor said that "even the possibility of such a talk weakens the dollar and renews fears about its continued viability as an international reserve currency."
Several leading Republicans have echoed her criticism, and media mogul Rupert Murdoch's Wall Street Journal says the world is wondering if America has cast the dollar adrift.
"Washington may not care to notice, but the sell-off in the dollar is a daily global vote on U.S. economic policy. It is not a vote of confidence," said a recent newspaper editorial.
'FEAR IS SUBSIDING'
But Nobel Prize-winning economist Paul Krugman wrote this week in his New York Times column that a weak dollar is actually good.
"For one thing, it's mainly the result of rising confidence: the dollar rose at the height of the financial crisis as panicked investors sought safe haven in America, and it's falling again now that the fear is subsiding," he said.
"And a lower dollar is good for U.S. exporters, helping us make the transition away from huge trade deficits to a more sustainable international position," he added.
Yet for some Americans the weak dollar just seems like more economic doom and gloom.
"It sucks," said Delores Marshburn, an office manager who lives in Manhattan. "I don't have any money as it is and then to have a weak dollar -- I am never going to have any money. No matter what I do I am never going to have any."
One New Yorker admitted he didn't know what to make of the situation.
"I'm concerned about it, but I don't know exactly what to be concerned about," said Kevin Doyle, 24, of Brooklyn, wearing a Broadway show sandwich board and handing out discount ticket flyers. "I'm worried about the economy but the weakness of the dollar isn't something on my mind everyday." (Editing by Mark Egan and Xavier Briand; additional reporting by Tim Gaynor and Carey Gillam)