PORTLAND (AP) – U.S. Rep. Tom Allen has yet to announce his challenge to Sen. Susan Collins, but the race is already shaping up as one of a handful likely to draw the national spotlight in 2008.

The contest, which already has given rise to a television ad and turned on the spigot of out-of-state money, may well determine whether moderate Republicans such as Collins and fellow Maine Sen. Olympia Snowe have a future in regions like the Northeast that seem to be turning bluer with each national election.

Allen, a six-term Democrat from southern Maine’s 1st District, has all but declared his candidacy, a formality that’s only days away. “You can expect an announcement in early May,” he said.

Unlike Maine’s 2006 Senate race in which Snowe trounced a poorly financed left-wing Democrat, next year’s contest is shaping up as a battle between two popular candidates, each of whom will have represented Maine in Congress for a dozen years.

Along with races in Colorado, Minnesota and New Hampshire, it has begun showing up on virtually everyone’s watch list.

“This is going to be one of the most heavily watched Senate races in the 2008 cycle because it’s going to be a highly competitive race and it’s going to be widely seen as a seat that represents a potential pickup for the Democratic Party,” said Anthony Corrado, professor of government at Colby College.

Corrado, an expert on campaign finance, also said it is sure to be Maine’s most expensive election battle ever.

Collins is off to a fast fundraising start, having taken in $832,075 in the first quarter of this year. That, according to her filing with the Federal Election Commission, raises the amount of cash available to her campaign to $1.2 million.

Allen raised $393,243 in the quarter to boost his cash on hand to $812,484.

With more than a year and a half to go before the election, television spending has already begun. Collins’ foes made the first big advertising buy of the campaign when they spent $100,000 in early April to air a 30-second TV spot criticizing her opposition to a deadline for withdrawing U.S. troops from Iraq. Americans United for Change, financed by the liberal group moveon.org and labor unions, did not target Snowe, who voted the same way as Collins.

Collins followed up by posting an Internet response on YouTube.com to what she characterized as an “attack” ad funded by out-of-state money.

In her bid for a third term, Collins brings high approval ratings, a solid campaign war chest and a longstanding reputation for working across party lines.

Her high-profile role as chairwoman, and now ranking Republican, of the Senate Homeland Security and Governmental Affairs Committee has put her in the forefront of such issues as port security and the recovery from Hurricane Katrina.

She campaigned for the committee’s top Democrat, Joe Lieberman, during his bruising re-election bid as an independent last November and the Connecticut senator has already said he plans to return the favor on behalf of Collins.

Allen, a former Rhodes Scholar who studied at Oxford with Bill Clinton, is a former Portland mayor who lost his first bid for statewide office when he finished second in a five-way primary for the Democratic gubernatorial nomination in 1994. He was first elected to the House two years later and has easily won re-election ever since.

Despite previous speculation that he might vacate his seat to try to move up to the Senate – first against Snowe in 2000, then Collins in 2002 and Snowe in 2006 – Allen said he never gave serious thought to such a prospect until now. He said he believes Collins is the more vulnerable of the two.

Allen’s intentions this year became evident early on. Already, at least four Democrats have signaled their intentions to run for the seat he would vacate to challenge Collins.

Allen acknowledges that he would start out as an underdog when running against an incumbent. His hopes for victory rest on tying Collins to President Bush and the national Republican Party, especially on the unpopular course of the war in Iraq, analysts say.

Democrats are taking heart from last November’s defeat of Rhode Island Sen. Lincoln Chafee, one of the dwindling corps of GOP moderates. Allen’s campaign manager, Valerie Martin, detects parallels because Chafee, like Collins, was popular and had high approval ratings.

“Senator Chafee was not a radical. He was not some right-wing crazy Republican. He was a moderate guy. But his presence in the Senate and his support for some of Bush’s policies simply became intolerable to the people of Rhode Island, and I think Susan Collins has a similar problem facing her,” Martin said.

The Collins camp says its candidate stands out in a comparison of the record and approach of the two legislators.

In a campaign, Allen is sure to compare his votes against the Iraq war and Republican tax cuts with those of Collins, portraying her as an enabler for the Bush agenda.

Collins, in turn, will present herself as an independent-minded moderate whose ability to work with colleagues from both parties has been good for Maine and the nation. While opposing the president’s troop surge in Iraq, she has declined to support a timetable for withdrawal. In a sign that her patience is wearing thin, she said last week that if Bush’s new strategy fails to show results by August, Congress should consider all options.

With Maine’s independents the largest share of the electorate, followed by Democrats and then Republicans, unenrolled voters will decide the outcome.

But the state, once firmly entrenched in the GOP column, has trended Democratic in presidential elections. The last Republican to carry Maine was Kennebunkport summer resident George H.W. Bush in 1988.

“Senator Collins has always been a centrist, taking a nonpartisan approach. She has a great record of accomplishment,” said Steve Abbott, her longtime chief of staff and acting campaign manager. Allen, he said, is “very much a partisan Democrat” who has never had a bill that’s become law.

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