Sen. Barack Obama has "almost unlimited potential" and could be a contender against Sen. Hillary Rodham Clinton for the Democratic presidential nomination in 2008, former Senate Democratic leader Tom Daschle said.

South Dakota's Daschle, who lost his bid for re-election in 2004, said earlier this month that he will not run for president, despite exploratory trips to politically pivotal states like Iowa and New Hampshire earlier this year. He said Monday he believes Clinton, D-N.Y., is the front-runner for his party's nomination, but that there are several others, including Obama, who could potentially beat her.

"His stock is still rising," Daschle said of Obama, D-Ill. "He's one of those rare individuals who has almost unlimited potential and seems to defy most of the laws of political gravity at this point."

Obama, elected to the Senate in 2004, has said he is mulling a presidential bid and lining up staff should he decide to get in. His potential candidacy is attracting some top political talent, most recently Julianna Smoot, who led a nearly $119 million fundraising effort for the committee responsible for the Democratic takeover of the Senate.

Obama spokesman Robert Gibbs said no one has been hired yet. "There has been thought to who could help if Obama does decide to run and Julianna has been gracious enough to give us some advice about how you might put together a finance operation, but we simply have not brought anyone on board yet," Gibbs said.

On the Republican side, Daschle said he believes the front-runner is Arizona Sen. John McCain, and "maybe" former New York City Mayor Rudy Giuliani.

"I do think there are real indications that on both sides the nominee is not a forgone conclusion," Daschle added.

As for his own aspirations, Daschle said he enjoys his current work and doesn't want to spend the next two years raising the money needed for a presidential contest.

Daschle is working with several policy groups in Washington, including the liberal Center for American Progress, on energy development and climate change. He is also working on health care, foreign policy and American Indian issues.

Daschle is a special policy adviser at the Washington law firm of Alston and Bird, advising clients on the prospects of legislation. He said he has no plans to lobby in the immediate future.