In South Carolina primary, a fundraising showdown

WASHINGTON (Reuters) - The obscure groups behind the spending spree in the race for the Republican nomination for president are about to take it up a notch.

Super PACs, the fundraising giants that have already reshaped the campaign by spending millions of dollars for ads on TV, radio and websites, are gearing up for what could be the nastiest, costliest contest of the season: the South Carolina primary election on January 21.

"Every campaign that is left is going to be playing to win in South Carolina," said Charlie Smith, founder of Solutions 2012.

Smith's group supports former House of Representatives Speaker Newt Gingrich, who hopes to revitalize his campaign in South Carolina after being hit by a wave of negative ads in Iowa.

Super Political Action Committees (PACs) are legally separate entities from campaigns, even though they almost always are run by prominent supporters or friends of candidates. They can accept unlimited donations from corporations and individuals but do not have to identify donors until the end of January.

The spending by Super PACs is separate from the millions being spent by the campaigns themselves.

In the weeks before the Iowa caucuses on January 3, Super PACs unleashed $13.7 million in ads aimed at pumping up or putting down the Republican candidates hoping to run against Democratic President Barack Obama in November's election.

About 25 percent of that spending - $3.4 million - was for ads targeting Gingrich and created by Restore Our Future, a group that backs former Massachusetts Governor Mitt Romney.

The potential of big-money assaults by Super PACs was made clear by the ads, which questioned Gingrich's ethics.

Gingrich, who was leading the race when Iowans began to be swamped with the ads, wound up finishing fourth in the caucuses behind Romney, former Pennsylvania Senator Rick Santorum and Texas Representative Ron Paul.

The stakes will be huge in the South Carolina primary, the first to be held in the conservative South this season.

It likely will be the best - and perhaps last - chance for Santorum, Gingrich or Texas Governor Rick Perry to derail Romney's march to the Republican nomination.

SOUTH CAROLINA IS KEY

After narrowly winning the Iowa caucuses, Romney is expected to take the New Hampshire primary on Tuesday. He also leads new opinion polls in South Carolina, where the winner of the Republican primary has gone on to win the party's nomination in every election year since 1980.

"South Carolina is the place where the next big opportunity is," said Stuart Roy, who recently joined Red, White and Blue Fund.

The group supports Santorum, whose rise to a second-place finish in Iowa has the group scrambling to capitalize on his momentum.

Red, White and Blue - which depends on the largesse of Foster Friess, a Wyoming billionaire and supporter of conservative causes - is buying about $200,000 in ads this weekend in the South Carolina cities of Greenville, Charleston and Columbia.

In the first of what almost certainly will be a massive wave of spending during the next two weeks, Restore Our Future - the pro-Romney group - has spent $192,337 in South Carolina.

An official with Make Us Great Again, a pro-Perry group that spent $3.7 million on advertising before the Iowa vote, said it would be "active" in South Carolina but declined to say how much it would spend.

Winning Our Future, another pro-Gingrich group, also is expected to be aggressive in South Carolina. Rick Tyler, an adviser with the group, said it would make spending decisions soon.

Our Destiny, the organization backing former Utah Governor Jon Huntsman, will have its first South Carolina ad on the air starting on Monday, NBC News reported.

Endorse Liberty, the principal group supporting Paul, has not commented on its spending plans for South Carolina.

Supporters of Obama plan to be heard in South Carolina as well. Priorities USA, a group backing the president, already has spent $97,000 on South Carolina ads attacking Romney.

COURT RULING CHANGES THE GAME

By the time the November election is over, analysts expect more than $1 billion to have been spent by candidates and the groups that support them.

A big reason for such massive spending is the Super PACs that have emerged since a 2010 Supreme Court ruling struck down federal limits on how much unions and corporations can spend on elections.

Candidates and campaigns are not supposed to be involved with the Super PACs but the groups are intimately familiar with the strategies and talking points of those they support.

The relationship between the candidates and Super PACs has become one of the tension points of the campaign.

Gingrich, for example, has called Romney a liar over Romney's claim that he has no influence over the people running Restore Our Future.

The group is run by Carl Forti, who was political director of Romney's 2008 presidential campaign. Its treasurer and fundraiser also are former top aides to Romney.

Our Destiny, the pro-Huntsman group, is funded in part by the candidate's billionaire industrialist father, Jon Huntsman Sr. - which has raised questions about whether the father could be in violation of federal law if he is active in the PAC while advising his son.

Fred Davis, a former Huntsman adviser and senior strategist for Our Destiny, said Jon Huntsman Sr. had given money but was not involved in any spending decisions to avoid the appearance of coordination between the campaign and the PAC.

"Jon Huntsman Sr. had a choice," Davis said. "He could have been involved in the Super PAC and given us political advice but then he wouldn't have been able to talk to his son. He chose to stick with his son and he gave us the money and he has had zero to do with how it's spent."

In what critics have called a loophole that hinders transparency, the PACs have not had to report fundraising totals, donors or spending to the Federal Election Commission in more than six months and will not have to until the end of January.

By then, the primaries in South Carolina and Florida will have been held. And Romney, if he can do well in South Carolina and then in Florida on January 31, could have a virtual lock on the Republican nomination.

'DIRT-CHEAP MEDIA'

The widespread expectations that more money will be spent on campaign ads in South Carolina is notable in part because it does not cost much to advertise there.

Compared to New Hampshire, where candidates have to buy ads on Boston television stations, or Florida, which includes several major media markets, South Carolina is the political equivalent of a liquidation sale.

"You've got dirt-cheap media and only three weeks to dump money," said Wesley Donehue, a Republican consultant in South Carolina.

On local TV stations in South Carolina until January 21, "you are not going to see used car dealership ads," Donehue said. "This is all going to be political."

Historically, South Carolina has been the venue for political street-fighting, the kind of nastiness that the PACs are turning into high art.

It was in South Carolina, during the 2000 campaign, that Arizona Senator John McCain confronted a false whisper campaign that he had fathered an illegitimate child. McCain later called the episode "a really nasty side of politics."

"South Carolina's history is the wild west," said former Governor Mark Sanford, who resigned in 2009 after disappearing for four days to be with his mistress in Argentina.

With the arrival of Super PACs, Sanford said, "you've opened the door to a political culture that has already been accepting of those kinds of things."

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Top-spending Super PACs as of January 6:

Group Support Amounts:

Restore Our Future Mitt Romney $4.5 million

Make Us Great Again Rick Perry $3.8 million

Our Destiny Jon Huntsman $2.2 million

Winning Our Future Newt Gingrich $897,363

Endorse Liberty Ron Paul $637,335

Red, White and Blue Rick Santorum $537,200

9-9-9 Fund Herman Cain $418,445

Priorities USA Barack Obama $306,229

Freedomworks for Conservatives $131,218

America

Leaders for Families Rick Santorum $92,535

(Table reported by Alexander Cohen)

(Additional reporting by Kristina Cooke in New York; Editing by David Lindsey and John O'Callaghan)

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