SANDWICH, N.H. ‘ Rep. Carol Shea-Porter cannot escape the reality of her challenge, even here on these crowded fairgrounds dotted with prize-winning calves, fried-dough stands and brilliant New England foliage.

‘How are things looking for you?’ asks Wayne Higgins, a friendly white-haired veteran who doesn’t seem surprised to have stumbled across the Democratic Congresswoman among the Sandwich Fair’s many cow stables.

‘You know, it’s going to be neck and neck,’ she answers with an exhausted smile.

Indeed, the former social worker, who has defined her young political career by exceeding expectations, will have to do it again to earn a third term representing New Hampshire’s 1st district. Two independent polls released in recent weeks showed the sophomore lawmaker down 10 points.

She has less than three weeks to close the gap, while fighting a flood of outside spending, an excited Granite State GOP and Republican challenger Frank Guinta, the former mayor of the state’s largest city.

‘I always hear the same narrative. I came in with the tide and I’ll go out with the tide,’ Shea-Porter says, shaking her head. ‘I’m always considered the underdog.’

But Shea-Porter, joined by her mother, husband and daughter at the fair Sunday morning, found only friendly faces.

She chatted with Higgins about military issues for nearly five minutes, standing among tufts of straw and cow patties. Higgins says she earned his vote.

‘I like her. … I’m independent. I was a Democrat, but now I’ll vote for whoever I think is best,’ he says in classic New Hampshire fashion, noting that he will also support Republican Senate candidate Kelly Ayotte.

It comes down to trust, Higgins adds, glancing at his young grandson. He’s referencing questions that have swirled since before the GOP primary about Guinta’s personal finances.

‘If you’re going to run for Congress, you need to put your stuff out there,’ Higgins says of Guinta. ‘He’s not willing to do that.’

‘I Made a Mistake’

Guinta knows the financial controversy that has dogged him for months is at the center of Shea-Porter’s strategy to win in November.

His strategy, like those of Republicans across the nation, is tying his opponent ‘ whom he regularly refers to as ‘Carol Shea-Pelosi’ ‘ to problems in Washington, D.C.

But the incumbent has taken an increasingly aggressive tone in recent days.

Shea-Porter launched her first negative spot last week, seizing on Guinta’s financial issues. The 30-second ad features statements from Republicans questioning Guinta’s second-quarter personal loan of $245,000. His financial disclosure form previously listed three bank accounts worth $17,000 to $80,000.

In July, he amended the form to show a Bank of America account worth $250,000 to $500,000, but he has refused to provide bank statements detailing the source of the funds.

Former 1st district Rep. Jeb Bradley (R), who is featured in the new spot, previously said Guinta should drop out of the race ‘if there’s not a satisfactory explanation’ of the source of the money.

Guinta is frustrated by the issue. But it doesn’t seem to be going away.

‘I made a mistake,’ he said Tuesday morning, again declining to explain the source of the funds, this time while seated inside a Manchester breakfast fundraiser for a local state Senate candidate. ‘Unfortunately, it was brought up in the primary. … I don’t think people want to hear about these mistakes. They want to hear about substantive issues.’

Outside Groups Fuel Ad War

Guinta is getting plenty of help changing the subject.

Conservative groups have already spent more than $1.2 million on independent expenditures in the district. The list is topped by the National Republican Congressional Committee and Revere America, an independent group that has drawn allegations of coordination with the Guinta camp.

Outside spending on the Democratic side has been limited so far to little more than $11,000.

The pace of independent activity reached such a frenzied pace this week that it surprised even Guinta.

He paused in the midst of a Roll Call interview Tuesday morning when a new campaign ad flashed on the large television over the bar in Theo’s restaurant.

‘I haven’t seen this yet,’ he said of the spot that bashes his opponent and asks voters, ‘Carol Shea-Porter ‘ Does she believe what we believe?’

The disclaimer at the end of the ad said it was funded by the Commission on Hope, Growth and Responsibility, which Guinta said he had never heard of.

The GOP hopeful shrugged off questions about the influx of outside spending.

‘It’s going to happen on both sides. There’s nothing you can do about it,’ he said.

But across the room, local conservative favorite Ovide Lamontagne, who nearly upset Kelly Ayotte in the GOP Senate primary, said the outside spending was ‘concerning.’

‘It has a distorting effect on the process,’ he said. ‘It’s for the people of New Hampshire to make a decision. And I’d prefer to know who those people [funding the outside groups] are.’

There is little doubt, however, that Guinta needs the financial boost.

His campaign reported just $158,000 in the bank as of Sept. 30. That doesn’t go far, especially in the Boston media market, which is needed to reach New Hampshire’s southern population centers.

Reflecting an increasingly aggressive tone, Shea-Porter this week pushed Guinta to call on the groups to reveal their donors, many of which are protected because of their tax statuses.

‘New Hampshire people would not support him financially, so he’s got all these outside groups. … Clearly they’re trying to buy an election,’ Shea-Porter said while sitting in a coffee shop Monday morning on the edge of the fairgrounds. ‘The state is drowning in a sea of outside money. They are on the air every two seconds lying.’

Expect Shea-Porter’s tone to intensify in the coming 19 days as she fights to close the gap, although it’s hard to imagine the incumbent any more intense than she was at Tuesday’s debate.

Dueling Bullhorns

They weren’t supposed to ask each other any direct questions.

But after clashing for more than an hour before 200 people gathered at the New Hampshire Institute of Politics at Saint Anselm College, it was clear that the moderator had been rendered largely powerless.

Shea-Porter ultimately asked more questions of Guinta than the panelists, leaving the GOP challenger on his heels and frustrated for much of their first formal debate.

‘What you’re doing is attacking me on just about every single issue,’ Guinta said at one point, shortly before Shea-Porter fired another shot: ‘You sound like a victim. You need to be a leader, not a victim.’

The Democrat’s campaign would later explain that she was simply trying to pin him down on the issues, not attack. But the tone was tense and combative throughout, to the point where audience members shifted uncomfortably in their seats at times.

That was especially the case as Shea-Porter pushed Guinta to explain his positions on federal spending in New Hampshire and Social Security.

Round and round they went as Guinta refused to be defined.

‘I don’t want to take Social Security away from seniors as you claim I do,’ he said, repeating that promises to seniors would be honored. But he also repeated that the system would be bankrupt in the near future.

‘How do you pay for it?’ Shea-Porter banged at her opponent, again and again, noting that she favored extending the cap limiting the Social Security tax for high earners.

‘There needs to be some dialogue’ about the problem, Guinta said after an awkward and uncomfortable exchange that spanned several minutes.

The feeling was much the same outside, where more than 100 supporters of each candidate clashed for more than two hours along the road leading to the event.

It was a scene that felt more like the parking lot at a college football game. There was near-constant screaming from dueling bullhorns. Guinta supporters rattled handmade noisemakers. The chanting from both sides was angry and loud as a team of campus security officials paid close attention.

‘Carol Shea-Pelosi,’ the Guinta supporters shouted.

‘Hey Frank, what’s in the bank?’ Shea-Porter’s supporters responded.

GOP Sense of Optimism

Shea-Porter’s strategy is not unique to the Granite State’s 1st district.

State GOP Chairman John Sununu notes that vulnerable Democrats across the nation are battling to localize elections by defining their opponents.

‘They’ve decided to run on personal attacks,’ Sununu said, dismissing questions about Guinta’s bank accounts. ‘The voters of New Hampshire are looking for substance. Frank will be fine.’

Sununu notes that the 1st district is the more conservative of New Hampshire’s two districts. And Guinta’s roots in Manchester, the state’s largest city and one that is usually a Democratic stronghold, also helps his cause.

John Stephen is another factor.

For the first time in four years, New Hampshire Republicans have reason to get excited about the gubernatorial race. Stephen is behind in the polls, but the race is viewed as the first competitive contest since Gov. John Lynch (D) was elected.

It all adds up to a good year for New Hampshire Republicans up and down the ballot, Sununu says.

Meanwhile, back at the Sandwich Fair, the Democratic governor is fighting to save his own job, shaking hands in front of a fried-dough stand as Shea-Porter gives a local television interview.

‘Carol Shea-Porter always surprises people,’ Lynch said. ‘She always does better than people think she will.’