Rudy Giuliani is facing crippling trouble. Turns out that when he was bonking his current-mistress and future-lucky-wife-#3 out in the Hamptons he was charging the City the cost. And doing so in a rather tricky way, paying for cops with money from other, obscure city departments. In fact, it seems that the NYPD was shuttling the mistress around like a taxi service. Putting your girlfriend on the public dole is pretty much the classic political sex sandal.
And this scandal cuts so deep because it breaks down the compartments of the Rudy! machine. So far he's been able to keep the bad (epic disaster of a personal life) away from the good (His term as Mayor of New York and all it includes, the drop in crime, 9/11, etc.) But here we see Rudy's personal life corrupting his term as Mayor. That cuts out the very heart of his campaign. Without the idealized term as Mayor to recommend him, Rudy is just a borderline personality whose politics don't match his party.