Dueling in Dakota: how longshot Mike Rounds won the GOP gubernatorial nod - Case Study

David Beiler

Rounds conducted something other than a text-book campaign leading up to the Republican primary and was mightily helped by the relentless negativity of his two major opponents. In the end, his come-from-behind win was an upset of mythical proportions.

You've seen him repeatedly. He shows up in candidate fields about every third time there is an open seat: The hopelessly outgunned nice guy; the one with the impressive credentials, but deficient instincts for political advancement. The quieter, more thoughtful one, who always seems to know the sensible thing to say, but gets no headlines saying it.

Isn't it a shame, we always think, that he is everyone's second choice. Here is the one who could unite interests and conquer problems, and yet, he isn't really a choice at all.

Too honest, too nice, too principled to rake in the bucks from the powerful lobbies -- the amperage he needs to be heard -- he hasn't a prayer at the ballot box. What a disheartening lesson we learn from his futility.

Some call this type "John Trueheart." In contemporary South Dakota, he is known as Mike Rounds -- now the odds-on favorite for governor.

Rounds conducted something other than a textbook campaign leading up to the Republican primary in June. Starting with low recognition, he missed debates, talked to small knots of voters ad nauseum, criticized his opponents for their ideas only (rarely and mildly), and never seemed to offer major policy initiatives or anything else that would generate press coverage. Outspent 11-1 by one opponent and nearly 8-1 by the other, he hired no staffers, had family members run his campaign, and didn't bother with GOTV. His only paid consultant was a fledgling ad agency in Pierre, a market hub of 13,000.

Nevertheless, Rounds bested the longtime state attorney general by 15 points, while a mega-millionaire ex-lieutenant governor trailed. It was an upset of mythological proportions.

Many have attributed Rounds' improbable success to his being a lucky bystander while two big guns blew each other away, but was it as simple as that?

Rounding Out the Field

After dominating South Dakota politics for a generation, term-limited Gov. "Wild Bill" Janklow (R) is running for Congress this year. That should have touched off a frenzied contest for the GOP gubernatorial nomination, a winning credential in the last six general elections. But nine months out, the primary appeared to promise little more than a coronation.

The state's only congressman -- popular three-termer John Thune (R) -- was known to want to return to the state from Washington, and was considered a prohibitive favorite in the open governor's race. But then, party control of the U.S. Senate changed last summer with the switch of a single member, and heavy pressure was brought to bear on Thune to challenge freshman Sen. Tim Johnson (D).

After intensive lobbying by President Bush, Thune changed his tune in August and announced his Senate candidacy last October. By then, four Republicans had been milling around the govstakes gate:

* Mark Barnett, 47, state attorney general for the past 11 years and governor-in-waiting for just as long. The state's top vote-getter in 1994, he ran unopposed in 1998. All the while the Sioux City native cutivated contacts, lined up key support and -- for the past four years -- stockpiled campaign funds. He took long looks at running for the top job in 1994 and 1998, but veered off after late formal entries by Janklow, the 800-pound gorilla of state politics. Imbued with the pragmatic instincts of longtime state leadership, Barnett was the favorite of the GOP establishment.

* Steve Kirby, 49, wealthy investor, scion of a prominent Sioux Falls family, groom to an heiress of the Wall Drug fortune. Kirby was an officer of his family's surety bond company for 15 years before the firm was sold in 1992. He then used the windfall to launch Bluestem Venture Capital, shortly before being appointed lieutenant governor m 1993. (The assignment came from acting Gov. Walt Miller, who had just ascended to his office following the death of Gov. George Mickelson in a plane crash; Miller and Kirby went on to lose the 1994 gubernatorial primary to the ticket of Janklow and Carole Hillard.)

* Ron Williamson, past Adjutant General of the state National Guard, Chief of Staff to Gov. Janklow (1979-83), and CEO of Sioux Falls Citibank (1990-97). Then in the process of organizing a think tank called the "Great Plains Public Policy Institute," Williamson had also worked for the Legislative Research Council and the South Dakota League of Municipalities.

* Rounds, 47, a Pierre real estate/insurance agent who spent ten years in the state Senate (the last six as majority leader) before being chased out by term limits 18 months ago.

Despite his ties to the popular Janklow, Williamson edged away from the race through the fall, and never officially entered. Rounds announced in November that he would not run, then reversed field in December after being cajoled by numerous friends.

The source of his reluctance was also the reason his waffling attracted little notice.

"Kirby had vast personal wealth and Barnett had a substantial war chest coming into this thing," explains David Kranz, political columnist for the state's largest newspaper, the (Sioux Falls) Argus Leader. "Barnett was considered predestined to be governor by many Republicans. There was a widespread feeling the race would be betweeen these two. Mention of Rounds got no attention at all."

An August benchmark poll taken for Barnett had given the Attorney General a 47-16 percent lead over Kirby, with a mere three percent for Williamson. Rounds was not even listed. The lack of consideration given his candidacy was puzzling, as he had just finished six years of leading the party in the upper house of the Legislature.

"Even though he had the experience to be an effective legislator, that idea didn't take hold until later," observed Kranz.

It would prove to be the catalyst for his sudden success.

Predator vs. Hack

On October 12, Kirby was present at the Senate campaign kickoff for his close friend, John Thune. Four days later, he became the first Republican to enter the gubernatorial race.

Simultaneously declaring himself to be both a small businessman and venture capitalist, the longtime bond counsel boasted "what we have been doing in South Dakota the past many years is we've created hundreds of really good jobs." In an obvious dig at Barnett, Kirby insisted "people will vote for the person who can best handle the financial problems ahead...[not someone] who's been out there longest or been to the most party functions."

There were indeed financial problems ahead. The incoming governor would face a deficit of at least $38 million -- more than $50 per resident -- the legacy of a recent inheritance tax repeal. What was the solution? A professional rainmaker, said Kirby; an experienced government hand, countered Barnett. Both signed a pledge to veto any proposed tax increase if elected, although Barnett balked at first.

Throughout the campaign, Rounds would prove the Dutch uncle, the voice of unflinching candor and irrepressible reason. He refused to sign the pledge, explaining that "there is no way I can tell what we might face four or six or eight years down the road." He revealed the $38 million deficit was really $53 million, since money was being borrowed from the state's capital construction fund to pay for operating expenses.

Noting sparse state financing of education that has resulted in the nation's lowest teacher salaries, Rounds defended an unpopular four percent tax on transportation services he had helped institute as a means of school funding in place of property taxes. Yet he alone among the candidates refused to promise he would never eliminate a state college campus:

"Someday, we may be looking at a better way to do it," he told a university audience. "If that happens, I certainly would want to have the option available..."

Rounds' seemingly impolitic forthrightness never seemed to draw fire, as the two heavyweights in the race studiously ignored him until the final two weeks of the campaign. They seldom missed an opportunity to bitterly criticize each other, however.

When Kirby unveiled his economic development plan on February 28 - promising to create 50,000 jobs in his first term - Barnett's campaign put out a letter claiming 90 percent of the jobs Kirby had funded as an investor were created out-of-state. "[That] makes Steve Kirby the single biggest job exporter in South Dakota history," the response thundered.

In what was the beginning of a telling pattern, the AP wire story on the exchange ended its three-sentence lead with the observation: "The third Republican contender took the high road."

A flight of commercials touting Kirby's plan aired the first week of March, drawing fire from state officials who contended they falsely reported massive job losses in the state. While Kirby used December 2000 to December 2001 figures from the state budget office to claim an annual loss of 3,100 jobs, the state labor secretary and economic development commissioner used average monthly figures to contend the state actually gained 1,500 workers.

When Barnett's campaign trumpeted the officials' crticisms as proof of Kirby's ignorance of state government, the investor's campaign decided it was time to take off the media gloves. Spots blasting the AG for vacillating on the no-tax pledge blanketed the airwaves in a 1,200-point assault.

At the same time, Kirby stepped up his continuing courtship of social conservatives, a group that so often plays a major role in Republican primaries. Taking many political observers by surprise, he announced that as governor he would introduce legislation to further restrict abortions, within constitutional limits.

Barnett's lead began to quickly evaporate, alarming his campaign. In short order, he released his tax returns (challenging Kirby to do the same) and presented his master plan for the state. Among the new ideas: use the $5 million per year in interest from the tobacco settlement to fund school curriculum improvements and college scholarships; and release the $20 million in the state's economic development fund to new and expanding businesses.

Kirby ignored the tax release call, dismissing it as a class warfare gimmick. "We made sure legally required [disclosures of interests] were filed on-time," recalled Kirby manager Scott Odenbach. "But to dig up everything on his tax returns and all those companies he had invested in, and reveal the details, would have made other investors unformfortable.... We decided...if the opposition wants to make his wealth an issue in a Republican primary, it will be to their detriment."

Kirby was even more dismissive of the Barnett master plan. "The smallness of his economic vision is remarkable," the investor sneered. "It's clearly a plan focused on thinking inside the bureaucratic box."

Underwhelmed by the response to his free media initiatives, Barnett shifted strategies. "We had to define [Kirby]," explained pollster Bob Moore. "He was Mr. Good Guy at that point. People had seen only positive stuff about him."

Barnett media man Paul Curcio -- who had produced only positive messages -- was promptly sacked in favor of a renown hard-baller. Odenbach remembers the switch well:

"People told us, 'Watch out -- Stuart Stevens is known for going for the jugular.' It wasn't a week after that he came out with a negative ad. Stuart stayed true to form."

The first Stevens spot ("Spanning the Globe") hit on April Fool's Day, skewering Kirby for the fact 90 percent of his South Dakota-generated investment capital was going to produce jobs in other states. Kirby media maven Pat McCarthy countered with an ad ripping Barnett for Clintonesque semantics concerning his department budget.

Barnett had claimed he had submitted lower general-fund budget requests five years in a row and that his general fund department budget had increased only 8 percent over his three terms in office. Kirby's ad claimed the AG's budget had in fact increased 86 percent over Barnett's tenure, a contention backed up by the chairman of the state House Appropriations Committee. The AP reported the actual figure was 40 percent.

Whatever the real story might have been, McCarthy's satirical "wiggle-wiggle" ads attacking Barnett's character were widely perceived as below-the-belt in chummy South Dakota. But the next salvo fired in the media battle qualified as downright unconventional warfare.

Skin Flick

Denied access to Kirby's tax returns, Barnett's researchers turned to the Internet to plot the course of the mega-millionaire's money. Following information on the Web site of Kirby's Bluestem Venture Capital, they began investigating Collagenesis, a Massachussetts-based company backed by Bluestem to the tune of a million dollars.

Two years before, Collagenesis had been the subject of an investigative series by the Orange County (California) Register that discovered the company had obtained donated cadaver skin and processed it into a very expensive product called Dermalogen, that was widely used in cosmetic surgery. The skin from one cadaver produced $36,000 worth of Dermalogen, which was used primarily to enlarge lips and smooth out wrinkles.

The Register expose thoroughly demonstrated that the cadavers were donated to tissue banks by family members who had no idea the remains of their loved ones were being used for profit in the cosmetic surgery industry. While it is against federal law to buy or sell tissue for a profit, the law allows for "reasonable fees" to cover processing costs, without defining what is reasonable. The loophole had resulted in large amounts of donated skin being used for cosmetic surgery while thousands of severe burn victims went without desperately needed grafts.

"Companies like Collagenesis that sell to plastic surgeons can afford to pay tissue banks many times more for cadaver skin than burn centers can," the newspaper explained. The ensuing bad publicity eventually scared off the suppliers of Collagenesis and forced it into bankruptcy on December 28,2001.

Stevens decided to craft a TV spot with all this rather gruesome information. Recognizing the complexity of the case, he produced a 60-second attack ad. (This, from a man who once insisted "30 seconds is an eternity to the modern TV viewer.")

"You didn't have to understand everything" Stevens said, "you just knew it was creepy....It was part of the process of getting people to take another look at Steve Kirby."

At a debate held April 9, both Kirby and Barnett defended the practice of airing negative ads during a campaign. "We have a duty to speak out to you, the voter, in honest terms about what we perceive to be differences in each other's campaigns," explained Kirby, "and to hold each other to the representations that we made earlier."

As he spoke, Barnett's Collagenesis ad was making its debut. By the following day, Kirby's perspective had changed, as he blasted the ad as false and "sick." The AP story described Kirby as "visibly upset" as he declared: "Never before, in South Dakota, ever, have allegations this vile been made of anyone in any party to anyone."

The Kirby campaign had not been caught flat-footed, however. "About a week before, we got reports [Barnett operatives] were taking a poll about skin donations," Odenbach recalls. "That's when we asked, 'What's the company in question here? What can we expect? What's going on? That's when Steve's partner got us the details." Kirby was thus able to quickly counter that the skin layer used in manufacturing Dermalogen was not even the same layer used by burn victims, and that Collagenesis had set up a program that enabled tissue banks to separate the two.

The next day, the Barnett campaign put out a 10-page press release on the Collagenesis episode that included such details as the fact some donated skin had been used to enlarge penises. A detailed timeline was provided, indicating that Kirby had invested his million two months after the Register story had broken, and that the skin separation program sponsored by Collagenesis had been announced three months after that. Barnett claimed the program had been instituted only after the tissue banks had cut off Collagenesis' skin supplies.

The impact of the Collagenesis episode on the campaign is itself a heated controversy. The Stevens ad ran for a full week, and Barnett continued to hammer on the issue for several days thereafter. Stevens insists Kirby's support took a steep dive as a result, but Odenbach is not convinced.

"A lot of people told us Barnett looked desperate with that ad. People were confused by it, weren't buying it. But on the other had our consultants were saying, 'You have to respond; you can't let any charge go unanswered.'"

Kirby toured the state with the ex-CEO of Collagenesis and the executive director of the South Dakota Lions Eye Bank, a participant in the company's skin separation program. While the experts tried to refute the charges, Kirby projected the pathos of an injured innocent. "Some politicians will do anything to win," he groaned. "Unfortunately, Mark Barnett is one of them."

The road show hit a bump, however, when the Eye Bank official was publicly rebuked for her performance in it by the organization's president.

Predictably, another missle was mounted on the Kirby launch pad: this one criticizing Barnett for contributions from video casino operators in a way that suggested he had Mafia connections.

By April 25, the Argus Leader was moved to editorialize: "Here's a message for gubernatorial candidates Mark Barnett and Steve Kirby: Stop it! Voters have had enough. They've had enough of Kirby's slams against Barnett hinting that he's in the pocket of organized crime. They've had enough of Barnett blasting Kirby, saying that burn victims can't get needed skin grafts because of an investment in a company called Collagenesis.... We've all had enough of 'wiggle, wiggle' and all the rest....It's time to stop. Focus on the issues. Kirby and Barnett should tell us what they'd do as governor -- not what a bad person their opponent is."

Family Project

Although the third man in the contest had been overshadowed by the megadollar donnybrook being waged by the frontrunners, the press had not forgotten him.

"In attacking each other, Kirby and Barnett have more than made up for Rounds' statesmanship," reported the AP's Joe Kafka on April 15. "....If the faithful feel he can beat the Democrats' [nominee] in Novem-ber, Rounds will likely gain support from people who are fed up with frequent fireworks between Kirby and Barnett."

Writing in the Argus Leader six days later, Kranz confirmed that phenomenon was taking place:

"On most days it is not uncommon for Republicans to call and volunteer they are fed up with the hostile exchanges between...Barnett and...Kirby. Then they will say they are voting for Mike Rounds."

The evidence was not just anecdotal. Pollster Bob Moore's tracking polls for Barnett showed Rounds beginning to rise in late April, an ascent that never faltered and accelerated over the last three weeks before election day. Interestingly, the campaign without pollsters could feel the earth move at the same moment.

"I think the turning point was late April," says Jamie Rounds, co-coordinator of his brother's campaign along with their sister, Michele Brich. "After the other guys had spent two solid weeks pounding each other [the first half of April], we decided it was a good time to drop the four-page tabloid Michele and I had put together, along with a guy from Mike's insurance office who used to work at a newspaper. We had it inserted into all the papers in the state....People were all thinking, Is there anyone else out there?' They saw the tabloid and said 'Wow! There is someone! And he's well qualified too!'"

Jamie, 30, can be forgiven his exuberance: he came to the campaign straight from a Catholic seminary. The shift was not So abrupt, he insists. "In fact, the jobs were very similar. You have no money, and you're trying to sell a person to people you don't know."

Given charge of the region around Sioux Falls -- the state's only real population center -- Jamie ran the campaign out of his car for the first several weeks. Eventually, the digs improved.

Reporters covering the race "would go to Barnett's building [in Sioux Falls], then Kirby's building, then to Round's room," chuckled David Kranz.

The fact the Rounds campaign was a family affair was not as limiting as it may seem. The candidate has 13 siblings raised by a political activist, and his wife and four kids pitched in, too. Jamie earned a political science degree before turning toward the priesthood. In addition to the tabloid, Rounds produced two talking head TV spots early in the campaign and used them throughout. Until the final two weeks, they were seen only on cheaply bought cable channels. The media campaign was handled by Lonnie and Jeff, two young men who recently set up shop in Pierre as Comprehensive Media Services.

Coasting to the Close

Unlike most low-budget gubernatorial candidates, Rounds could not rely on media polls to give him some sense of his progress. Only one was released during the entire campaign (by TV station KELO on May 13) and that was conducted over a period of more than two weeks. As a result, the typical media "horse-race" obsession never took hold, much to the underdog's advantage.

Kirby and Barnett were polling regularly, however, and by May Day they were looking at numbers similar to those which would eventually be reported in the KELO poll: Rounds was drifting upwards into contention, and over half his support came from people who said there were motivated by the ads of the other two candidates. Nearly two-thirds agreed the current campaign was more negative than usual.

Both frontrunning campaigns began falling over themselves in search of positive means for selling their candidacies.

On April 29, Kirby floated a seemingly half-baked idea to provide free prescription drugs for seniors with money gleaned by raising the state's share of video lottery money. Although ads touting the plan had already hit the air, the former LG hadn't figured out yet just how much of the state share (currently 50 percent) would be raised. His campaign indicated one approach being studied for the program was persuading an insurance company to offer prescription drug coverage with premiums being paid by the state. A similar arrangement had been ridiculed by Kirby as ineffective when Barnett had proposed it a month before.

The gambit was criticized as ill-conceived -- even by the usually placid Rounds -- but Kirby pushed on, gradually adding more details and touring senior centers with 89-year-old TV pioneer Art Linkletter in tow, flogging the plan like cases of Geritol.

On May 6, Kirby tried another positive tack, calling for a "Code of Conduct" for TV ads in the campaign. "I wish I could believe Mr. Kirby is sincere," retorted Barnett "In an April 19 [newspaper] article, he pledged then to go positive. The next day he came out with Mafia video ads."

Stevens scoffed "It was like killing your parents and pleading for mercy as an orphan." By this time, "Kirby had a credibility problem," Moore agrees. "It started with his promise of 50,000 new jobs -- a stupendous amount for a place like South Dakota. That just wasn't believable, and it was symptomatic of his campaign from there on."

The same day he announced his code, Kirby launched a spot extolling his 50,000 jobs promise, the free drugs program and his born-again campaign attitude. It fell flat.

Barnett also called in his air strikes over the last month of the campaign, but continued blasting Kirby through targeted mail. One piece had liquid from a syringe spell out "video lottery," suggesting Kirby's free drugs plan would hook the state on gambling income. Another depicted Kirby's $4 million home in Vail, Colorado, reportedly worth eight times more than his legal residence in Sioux Falls.

Despite the cheap price of TV advertising in the state, Kirby was making massive use of the mail as well. "One woman in Sturgis -- the West River country -- got seven different pieces of Kirby mail in one day," reports Kranz. "Five of them targeted."

Kirby appeared to be counting on the West River, a string of cattle towns north of the Black Hills known for its conservative independence. On April 17, he tapped a strongly conservative state legislator from the area to be his running mate, mindful that the same strategy had helped Bill Janklow oust then-Gov. Miller in the '94 primary.

That Janklow partner -- Lt. Gov. Carole Hillard -- annnounced her support of Barnett on May 7, touching off a widespread movement of the governor's operatives into the Barnett camp.

"They thought the disgust everyone felt toward the campaign meant voters would drift back to their original choices, back to the point where Barnett -- as the heir apparent -- had a big lead," Kranz theorizes. "But the rank-and-file were moving to Rounds."

That much began to come into view when the KELO poll was finally released on May 13. It showed Kirby ahead of Barnett 27 to 26 percent, with Rounds within striking distance at 17, and a massive 29 percent still undecided with four weeks to go.

Kirby ultimately decided to gently slap Rounds two weeks out, launching two ads that extolled his plan to provide free prescription drugs with more video lottery money. The spots claim Rounds and Barnett "side with the video lottery executives" while their drug plans offered miniscule relief to seniors, compared to Kirby's.

This relatively benign tap provoked a spirited reaction from Barnett: "Now he's picking on Rounds, too, and its not right."

Few noticed. When the big guys quit airing each other's dirty laundry, the press tuned out, save the occasional puff piece that did little more than boost Rounds as a thoughtful alternative. With the exception of the Argus Leader, "the press in the state only wanted to cover controversy, not policy," complains Odenbach.

The LG got a big boost a week out, when the National Rifle Association finally endorsed him, but by then the Rounds momentum was unstoppable. A mob of 30,000 people gave the surging underdog a joyous reception at a festival in Sioux Falls the day before the election, and he put in a sterling performance in a debate aired election eve.

Bitter Taste

How do you start with 5 percent recognition, get outspent 10-1 by your better-organized opponents, and still win? According to the experts who saw it happen, it is a matter of being in the right place at the right time with a credible resume. They offer no bottled lightning.

"It's very simple," insists Stuart Stevens. "Barnett had to stop Kirby from reinventing himself and becoming a sensation....Rounds didn't have much money, but we always knew there was a danger he could win, because it is a small state and he was a credible person...When A hits B and B hits A, C could easily benefit. The way you stop that is by introducing unfavorable information about both of your opponents. But Barnett likes Rounds -- they have the same small hometown -- and he refused to go after him.."

Journalist David Kranz agrees the election turned on antipathy toward Kirby and Barnett: "I don't want to burst Mike Rounds' bubble. He really thinks people voted for him because they like his ideas. But I have a very difficult time getting people who voted for Rounds to tell me what he stands for."

Is South Dakota a poor place to gauge typical voter reaction? Perhaps. The whole affair has left a bitter taste in the mouth of Scott Odenbach, a taste he shares with droves of voters he failed to persuade.

"If I were going to run for office in this state, my consultants would be 12 of my buddies from Eureka, Rapid City, Spearfish, Vermillion and Sioux Falls," he insisted. "The outside, do-it-by-the-book, 'here's how we do everything in New York and New Jersey' conventional wisdom just doesn't fit the case in South Dakota."

The Toteboard: Horses, Handlers, Wagers and Payoffs

          Mike Rounds                Mark Barnett

Manager   Jamie Rounds/Michele       Bob Gray
          Brich
Media     Comprehensive Media Svcs.  Stevens Reed Curcio
                                     Dawson McCarthy Nelson
Polling   None                       Moore Information
Mail      Comprehensive Media Svcs.  Targeted Creative Cmctns.
General   None                       Don Griffin
Spending  $250,000 (est.)            $1,900,000 (est.)
Votes     48,956 (44%)               32,395 (29%)
$/Vote    $5.11                      $58.65

          Steve Kirby

Manager   Scott Odenbach

Media     Stevens & Schriefer

Polling   Anderson Consulting
Mail      Majority Strategies
General   Lawrence & Schiller
Spending  $2,750,000 (est.)
Votes     28,728 (26%)
$/Vote    $95.73

David Beiler is a freelance writer, political analyst and senior contributing editor of Campaigns & Elections. He formerly served as an elected county official in Virginia.

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