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S.D. Senate Race Tightens Amid Green-Card Scandal

S.D. Senate Race Tightens Amid Green-Card Scandal

By Adam O'Neal - October 10, 2014

During a debate this past summer, South Dakota Democratic Senate candidate Rick Weiland accidentally acknowledged Republican Mike Rounds -- the former governor and his leading opponent -- as a “soon-to-be” senator.

The crowd laughed, and Weiland immediately caught his mistake. He took the verbal flub in stride, joking, “That’s a good gaffe!”

Though Weiland clearly misspoke, his words seemed understandable at the time. Virtually every major electoral forecaster had described the three-way race in South Dakota -- along with likely lopsided contests in West Virginia and Montana -- as a sure thing for Republicans hungry to win a Senate majority.

Top Democrats have come to disagree with the conventional wisdom, however. And they’re betting serious money against it.

Signs of Democratic optimism surfaced last week. RCP reported Public Policy Polling’s Tom Jensen assertion that the race “is just as competitive as the ones in places like New Hampshire and Michigan that have drawn far more attention.”

Then the levee broke: Bloomberg Politics reported Wednesday that the Democratic Senatorial Campaign Committee will be spending $1 million in an effort to defeat Rounds -- a serious late-in-the-game investment for South Dakota’s relatively inexpensive media market. The news followed reports earlier this week that Harvard Law professor Lawrence Lessig’s Mayday PAC would be spending $1 million to support Weiland.

Some polling suggests the race is tightening, but why are these groups willing to spend seven-figure sums on a contest Republicans are favored to win?

Democrats believe the answer lies in perceptions of Rounds’ vulnerability due to his handling of EB-5, a federal program established in 1990 that grants green cards to foreign investors who sink at least a half-million dollars into projects in the United States. The Sioux Falls Argus Leader described South Dakota’s EB-5 situation as a “complex affair at the intersection of government, business, crime and politics,” one that has “spawned numerous bankruptcies, lawsuits, audits and investigations.”

There exists no simple plot about Rounds and EB-5; there’s no “time for bridge traffic” email or clear-cut set of events that would tarnish him. Instead, it’s a series of controversies involving the program, which Rounds frequently touted during and after his gubernatorial tenure, that has national Democrats suddenly optimistic about the Senate race.

Much of the controversy stems from the state’s handling of loans to a beef plant that went bankrupt just a year after opening. The state lost money; allegations arose about corruption in the agency that handled the loans. Federal law enforcement probed the program, and one Rounds administration official committed suicide last year while being investigated. A favorable ruling from a California arbitrator boosted Rounds’ defense, but questions remain.

“Even Republicans acknowledge that Mike Rounds has run a horrible campaign, and now his candidacy has been engulfed by the EB-5 scandal,” said DSCC spokesman Justin Barasky.

Asked if the new Democratic ad buy would alter the GOP’s strategy in South Dakota, National Republican Senatorial Committee spokesman Brad Dayspring told RCP that the investment was evidence of Democratic desperation and “a sign they’re extremely worried about Colorado, Alaska and Iowa.”

“Just last week the DSCC said that their ‘internal polls’ showed they could not win in South Dakota. This week, they’re pouring money into the race,” said Dayspring. “They’re throwing mud at the wall hoping something sticks.”

This isn’t the first political race in which EB-5 has generated controversy. Last year in Virginia, Democratic gubernatorial candidate Terry McAuliffe came under fire after news broke that the Department of Homeland Security was investigating his car company over how it used the EB-5 program.

A Washington Post editorial asked whether McAuliffe’s firm is “a serious and viable automotive enterprise or mainly a scheme to attract foreign investment capital and serve Mr. McAuliffe’s political agenda.” McAuliffe narrowly defeated Ken Cuccinelli, who had hammered him on the arrangement.

The EB-5 controversy has already made its way onto the South Dakota airwaves.

One Weiland ad depicted a green-card auction, with the narrator asserting, “When Mike Rounds ran the EB-5 program, U.S. residency cards were for sale to the highest bidder, putting millions into the pockets of the governor’s hired cronies, while South Dakota taxpayers took a massive hit.”

The Rounds campaign has pushed back against the assault in its own ads. One spot suggests that the “attacks on Gov. Mike Rounds are nothing more than dirty politics and character assassination.”

RCP still rates the race “likely GOP.” The RCP average shows Rounds with about 39 percent of the vote; Weiland earns 27 percent; and independent Larry Pressler (who spent three terms in the Senate as a Republican) takes in 23 percent.

“The biggest beneficiary of these latest events has been Pressler,” said David Wiltse, a South Dakota State University professor who specializes in comparative politics and U.S. elections.

A DSCC official told RCP that Weiland has the group’s backing, adding that the Democratic nominee attended the DSCC retreat on Martha’s Vineyard earlier this year.

Wiltse argued that while the EB-5 scandal has recently gotten national attention, it hasn’t generated much in-state traction during the months it’s been an issue in the race.

“In the end, the fundamentals that normally drive Senate elections are going to drive this one,” he asserted. “I don’t think any of the personal issues are really going to make people vote against their underlying beliefs.”

Adam O'Neal is a political reporter for RealClearPolitics. He can be reached at aoneal@realclearpolitics.com. Follow him on Twitter @RealClearAdam.

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