By Terry M. Neal
washingtonpost.com Staff Writer
Monday, August 8, 2005 8:30 AM

Such is the state of the Democratic Party that some of its best news in a while came last week in the way of a defeat.

Democratic Party leaders were positively giddy about Democrat Paul Hackett's loss to Republican Jean Schmidt in Tuesday's special election to fill a seat left open in Ohio's 2nd Congressional District. The seat's former occupant, Republican Rob Portman, left in May to become the new U.S. trade representative. Portman won 72 percent of the vote in 2004, but Schmidt defeated Hackett by only a margin of about 4,000 votes, or 52 percent.

"The race in Ohio and the outcome was really a bellwether for the races to come [next year]," House Minority Leader Nancy Pelosi (Calif.) said in an interview with Talking Points.

"Even in a district that Bush won by 30 points less than a year ago, the Republican candidate couldn't win an even 3 percent majority." Democrats would have been "thrilled" to have come within even 10 points of victory in that district, she said, adding that Hackett's close defeat underscores the party's optimism about next year's midterms.

The party has met most of its candidate recruitment goals in competitive districts and raised a record $24 million for House candidates in the first half of the year, according to Pelosi. "People are tired of a rubber stamp congressman," she said. "They have serious questions about war, serious questions about abuse of power in Washington, serious questions about the economy. Republicans can diminish this all they want, but they do so at their own peril."

Even the godfather of the Republican revolution, none other than former House speaker Newt Gingrich (Ga.), agreed in very similar terms.

"There is more energy today on the anti-Iraq, anti-gas-price, anti-changing-Social Security and I think anti-Washington [side]," Gingrich told the Washington Post. "I think the combination of those four are all redounding to weaken Republicans and help Democrats. . . .  I don't think this is time to panic, but I think it's time to think. If we don't think now, then next September [2006], people will panic when it's too late."

But is Hackett's strong finish really an affirmation that Democrats are on the path out of the political wilderness, as some party activists believe? Or, as many wary political observers argue, are the results more a reflection of voter dissatisfaction with an Ohio Republican Party plagued by a string of scandals? As with many things in politics, the truth may be somewhere in the middle.

Democrats view the Ohio race as a ray of hope in a bleak political landscape.

They see Republicans going into next year's midterms with a weakened president, an unpopular Congress, a middling economy, a controversial war in Iraq and high gas prices, all while fighting the tide of history. The president's party typically loses a significant number of congressional seats on average in six-year, midterm elections.

Furthermore, Democrats were cheered by the numbers coming out of the Ohio 2nd because the district encompasses seven counties in southern Ohio, including rural areas and large chunks of the Cincinnati metropolitan area -- the most Republican major metropolitan region in the nation, according to the National Journal. The GOP has dominated the district for decades, and registered Republicans outnumber registered Democrats by a more than 3-1 margin.

These are exactly the types of districts, Democratic Chairman Howard Dean and others have argued, that Democrats must become competitive in if they are to retake the House. A day after the loss, the Democratic National Committee issued a press release headlined: "Dean: Hackett Race Highlights Success of Fifty-State Strategy."

While current conditions nationally might produce an environment ripe for the picking by Democrats, they still have to field strong candidates in Ohio and other swing states to dislodge GOP incumbents, or take over GOP-leaning open seats. This task has been complicated by redistricting efforts aimed at limiting the number of competitive seats.

To whatever extent Republicans may be weak in Ohio and elsewhere, Democrats have to recruit and field attractive candidates. It's not every day that the Democrats nab a tough-talking, articulate Iraq war vet like Marine reservist Hackett as a candidate.

Some nonpartisan political observers in Washington believe the Ohio outcome probably says more about Ohio than it does about the national landscape.

Republicans in Ohio are facing a growing scandal over the fundraising activities of a party activist named Tom Noe. State and federal authorities are investigating Noe's handling of two rare-coin funds in which he invested $50 million from the Ohio Bureau of Workers' Compensation. Noe's attorneys acknowledged that up to $13 million from the fund is missing, and state law enforcement officials have accused him of stealing millions from the fund. The Noe scandal has singed, in one way or another, most of the state's top GOP officials because of his deep connections and fund-raising efforts on behalf of the Republican Party.

"It means a lot more for Ohio Republicans than national Republicans because there are some unique circumstances in that state," said Amy Walter, a House race analyst for the nonpartisan Cook Political Report. In Ohio, like Washington, Republicans control the executive and legislative branches.

Ohio's troubles could be viewed as a microcosm of what the nation as a whole is suffering on a larger scale. It has its own political scandal that won't seem to die, and its economy continues to struggle.

In Ohio, there are three or four current Republican districts that have been competitive at one point or another in the past decade that could suddenly become competitive again, but only if Democrats field the perfect candidate. But the problem, Walter said, is that Democrats so far -- and it is still a bit early -- have yet to recruit any candidates as appealing as Hackett to challenge the Republican incumbents.

Hackett's showing could encourage other strong candidates to challenge Republican incumbents in Ohio, and perhaps even nationally. Walter points out that more than 60 percent of the members of the House have arrived since the Republican revolution of 1994. Most haven't run under the sort of challenging conditions that they'll face next year, she said.

Stuart Rothenberg, editor of the Rothenberg Political Report, sees it similarly: "I think it could well be a harbinger of things to come in Ohio. As to whether there are larger national implications, I think there are too little data to draw a conclusion."

Rothenberg said the DCCC ran a television ad in the final days of the campaign that focused primarily on scandals involving Republican Gov. Bob Taft and the state Republican Party.

"If Hackett had really wanted to make it about Iraq and Bush, he could have. He did lose his temper once and make a [harsh] comment about Bush... He campaigned more on who he was and the passion he wanted to take to Washington. It was more about him as a vehicle for change. And much of the change sentiment was about change in Columbus [the state capital]. So I think it's probably too big a jump to suggest it's the beginning of a wave for 2006."