In an early warning shot to potential Republican challengers, Senate Minority Leader Tom Daschle (D-S.D.) has already put in place much of his senior campaign staff, banked $3 million and is set to debut the first television ad of his 2004 campaign today.

Even as Daschle gears up, sources familiar with the thinking of former Rep. John Thune (R) believe he is strongly leaning toward entering the Senate contest and will announce his decision in early fall.

Thune may not have the primary field to himself, however, as Rep. Bill Janklow (R), a titan in South Dakota politics, remains interested in the race and is nearing a decision on his political future. However, one source close to Thune said Janklow’s apparent interest in the race “doesn’t factor at all” into the former Congressman’s decision-making.

Despite the lack of a formal announcement, Daschle is clearly gearing up for a Thune candidacy. He has raised money and established his grassroots infrastructure at a furious pace so far this year.

Daschle will show close to $3 million on hand in his July quarterly report, which covers contributions and expenditures from April 1 to June 30, sources close to the campaign said Tuesday. At the end of the first quarter, Daschle had $2.1 million in his campaign coffers.

In addition, he has a staff of more than 20, headed by Steve Hildebrand, who managed Sen. Tim Johnson’s (D-S.D.) narrow victory over Thune in 2002.

The Daschle team has shown a vigilance and willingness to attack Thune, primarily on his ties to several fundraising groups.

These rhetorical jabs likely influenced Thune’s decision last month to step down as chairman of South Dakotans for a Responsible Majority, a 527 committee. Democrats had protested that it was illegal for Thune to serve as the group’s chairman while maintaining an active federal campaign committee.

Daschle is attempting to duplicate — and improve upon — the ground operation that was largely credited for Johnson’s win in 2002.

Fifteen staffers are dedicated to field work and are split into several teams handling specific issues. In urban areas, a team is concentrated on health care policy, and in more rural areas, campaign aides are talking to potential voters about ethanol-related concerns.

Daschle’s first television ads also hit on ethanol, an alternative fuel produced from agricultural products. It is a major source of income in South Dakota and other farm belt states.

The ads, which began running today in the Sioux Falls media market and will continue for at least two weeks, feature testimonials about Daschle’s work on ethanol.

“We enjoy a very robust ethanol industry in South Dakota directly as a result of Tom’s hard work in Washington,” says one man in the ad.

“Senator Daschle wants to do everything he can to make this a campaign about issues South Dakotans are concerned about versus a lot of the negative discourse that goes on in politics,” Hildebrand explained.

He predicted “more ads like this” would be coming, though he would not discuss whether the campaign planned to stay on the air after the initial buy runs out.

Democratic Senatorial Campaign Committee spokesman Brad Woodhouse praised the spots as “exemplifying exactly why Tom Daschle is the right fit and the best choice for the people of South Dakota.”

The ads were produced by Karl Struble, Daschle’s longtime media consultant. Al Quinlan will handle Daschle’s polling, a change from past cycles when the survey research was done by Mark Mellman. Struble and Quinlan teamed up on the Johnson campaign in 2002.

Republicans quickly jumped on Daschle’s decision to take to the airwaves almost a year and a half before the 2004 election as a sign that he is attempting to shore up lagging support with such an early buy.

“This ad campaign is to try to turn things around,” said National Republican Senatorial Committee Communications Director Dan Allen. “[Daschle] is vulnerable because his interest lies more in Washington than in the values of South Dakota.”

Allen also pointed out that in a March poll conducted by McLaughlin & Associates for the NRSC, Thune and Daschle were in a statistical dead heat.

The poll was taken just one week after Daschle’s controversial comments about the war in Iraq. At the time, Daschle said he was “saddened that this president failed so miserably that we’re now forced to war.”

Those comments coupled with Daschle’s need to “walk the line” between leading the national party as Minority Leader and representing the views of South Dakotans create a major window of opportunity, a Thune source argued.

“Daschle is more vulnerable today than he has been since he first ran for his House seat [in 1978],” said the source.

Regardless of Daschle’s potential vulnerabilities, Republicans see a clear primary field as absolutely necessary to their hopes.

Currently, businessman Neal Tapio is the only Republican in the race, but in an interview Tuesday, he said he would bow out if either Thune or Janklow, a former governor who is now the state’s at-large Representative, entered the contest. Gov. Mike Rounds (R) has also been mentioned for the race but apparently has no interest after serving only half of his first gubernatorial term.

Janklow remains an X-factor; the former four-term governor has made it clear he is interested in serving in the Senate but is close friends with Daschle, which might preclude him from challenging the state’s senior Senator.

“He really hasn’t crossed that bridge yet,” Janklow spokesman Lee Cohen said. “It’s coming soon whether we are going to cross it or not.”

Cohen would not set a timeline on a Janklow decision, but Republican sources both in and out of the state note that the former governor has been surprisingly active politically so far this year, perhaps a sign of a budding Senate candidacy.

By refusing to rule out a Senate race, Janklow puts the White House in a tough position. Janklow and former President George H.W. Bush are close, and the current President Bush was a driving force in convincing Thune to run for Senate in 2002.

Although no national Republicans would go on the record about their preference in a Thune-Janklow primary, several made it clear that they believe Thune would be the stronger general election candidate.

Even if Thune has the primary field to himself, he may struggle to recreate the atmosphere that brought him to within 524 votes of defeating Johnson.

In that race, Thune benefited from five visits by Bush, which brought significant attention — not to mention money — to the race. Thune raised roughly $5.5 million for that contest.

In 2004, however, Bush’s main priority is his own re-election, and South Dakota, which he carried by a comfortable 22 points in 2000, is not likely to be a battleground state.

“The presidential campaign will send [Bush] where he needs to fight and win, not to states that he has in the bag,” said one high level GOP strategist.