By Dan McCue
Staff Writer

The prolonged campaign leading to South Carolina’s first-in-the-South presidential primary next year could prove to be an economic bonanza for the state.

Political observers, who have been crisscrossing the state in recent weeks, estimate the campaigns will bring in as much as $150 million.

They based those predictions in part on  both the Democratic and Republican parties  running their largest fields of candidates since the 1988 primary season.

Further, they contend, most if not all of those candidates are going to invest heavily in everything from television advertising to mailings to staff salaries to hotel rooms to restaurant meals to office rentals in the states that fall early in the primary calendar.

But if candidates’ expenditures provide a nine-month bump to the state economy, business leaders and economists believe the real benefit derived from moving the South Carolina Democratic primary to Jan. 29, 2008, and the Republican primary to Feb. 2, will be far more intangible but equally profound: placing the state’s image in front of millions of potential tourists and business relocation prospects across the country.

“Obviously, given how often we’ve seen them already, the candidates are taking South Carolina very seriously this year and it’s easy to get caught up in how much they may be spending here,” said Doug Woodward, chief research economist at the University of South Carolina in Columbia.

“The big story, and one that’s difficult for an economist to gauge, is what we’ll reap as a result of the political stories coming out of South Carolina. Based on this past week alone, I’d have to say those stories appear to be pretty positive,” he said.

There’s little question that the South Carolina primary season kicked into high gear with the Democratic presidential debate broadcast by MSNBC from South Carolina State University in Orangeburg on April 26, and that it’s about to get another shot of momentum when Republican contenders gather for their debate, which is being broadcast by Fox News from Columbia on May 15.

Amid the throng, state Democratic Party Chairman Joe Erwin, who stepped down from his party office two days after the Democratic debate, pegged the economic impact of the Democratic presidential primary in South Carolina at $30 million.

But U.S. Rep. James E. Clyburn, D-S.C., the House majority whip and alumnus of the university, said that the debate and the primary campaigns to follow would have a far bigger economic impact on the state.

“I’ve heard the estimates in the $30 million range, but I believe when you factor in all the hotel room stays and restaurants that will be patronized over the course of this campaign, the impact will likely be closer to $150 million,” Clyburn said.

“That’s why I think South Carolina should take a serious look at what transpired over this primary season and make it a real state event, as they do in Iowa and New Hampshire,” he said.

While no Republican official has offered an economic assessment of the race now firmly under way, given the party’s large field of candidates—a total of 10 are expected to participate in the debate in Columbia, compared to eight for the Democratic debate—and the fact that South Carolina is considered a pivotal Republican state, the party’s impact should be on par with, if not greater than, that of their Democratic counterparts.

Serious campaign benefits

Academics such as Frank Hefner, chairman of the College of Charleston’s Department of Economics and Finance, see election campaigns as having only transient effects on local economies.

“Any spending takes place only once every four years,” he said.

But South Carolina and states across the country are taking the potential monetary benefits of this year’s campaign seriously.

That’s a significant reason, along with wanting to have some political clout, why so many states have moved and continue to move their primaries up in the 2008 calendar.

The bill that moved Florida’s presidential primary from the second Tuesday in March to the first Tuesday in February specifically cites a report out of New Hampshire that suggests the state that’s hosted the nation’s first primary since the 1920s anticipates campaign-related economic benefits this year of more than $250 million.

“By comparison,” sponsors of the Florida bill wrote, “Florida is more than six times larger than the state of New Hampshire.”

Fleeting impact

Because the economic impact of a political primary is so short-lived, few deep analyses have been done on the subject. Officials in Iowa, which hosts the nation’s first contest in the presidential campaign calendar, the Iowa Caucus, suggest the quadrennial event brought between $70 million and $90 million into the state in 2000, but have never quantified how they arrived at that number.

By far the most exacting analysis was the 2000 New Hampshire primary study conducted by the Library and Archives of New Hampshire Political Tradition in conjunction with the N.H. Department of State.

The study sought to quantify the impact of candidate visits to school gymnasiums and labor halls, debates, breakfasts and other events, as well as the impact of the spotlight provided by exposure of the state on national television news and political programs.

According to the report, over the course of the 2000 New Hampshire primary, an estimated 20 million people were exposed to positive messages about New Hampshire in the national media, while an estimated 14 million were exposed to stories that recommended New Hampshire as a place to visit or do business.

The report went on to say the overall value of primary-related media exposure, purely in terms of tourism promotion and business development, was $33 million for the year leading up to the primary, while the overall economic impact of the 2000 primary campaign, inclusive of that $33 million, was $264 million.

That number included $83 million spent directly by the campaigns and reporters, which then had a multiplier effect of $31 million in indirect expenditures by businesses who received money from these entities, and another $115 million in induced expenditures by households that received income generated from the direct and indirect sales by these businesses.

Campaigns alone also paid New Hampshire residents more than $2 million in salaries and fees during the campaign cycle.

The report also credited the 2000 campaign with adding about 270 jobs to New Hampshire’s economy, most of them in the restaurant, transportation, lodging and service industries.

Getting ‘significant touches’

Afterwards, John DeWorken, the vice president of public policy and communications for both the Greenville and Spartanburg chambers of commerce, said the return for the business community from candidates touring the state comes from “their hearing our folks and interacting with them, what I refer to as ‘significant touches’ between the candidate and the business community.”

“When you think about it, South Carolina is about in the middle of the pack when it comes to size, but because our primary is so early and they’re spending so much time here, our concerns and our issues are going to be so much more familiar to these candidates than those in other, comparably sized states with later contests,” DeWorken said.

The economic and emotional impact of the campaign will likely come in waves and be centered on specific events, USC’s Woodward said.

“So far the Democratic debate and subsequent events held that weekend, like Congressman Clyburn’s annual fish fry, were probably the biggest events of the campaign so far, and Orangeburg certainly was the direct economic beneficiary of the debate. I imagine we’ll see another surge of economic activity with the Republican debate in Columbia, another in the fall and then a last big burst right before the primary,” he said.

“However, I think it’s important to keep this spending in perspective. Real direct economic impacts stem from having a business open its doors in the state, providing a payroll and ongoing benefits. Spending and activity associated with a political campaign tends to peter out quickly.”

Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.

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