"Thune is the Republicans' best and maybe only chance of beating Daschle in 2004. He was the challenger the White House wanted from the beginning and they finally got him," said Nathan Gonzales, political editor of the Rothenberg Political Report (search).
Although Daschle is popular statewide, Thune, who threw his hat into the race in a widely-anticipated move on Monday, has name recognition after holding the state's only House seat from 1997-2003 and keeping Sen. Tim Johnson to a razor-thin margin of victory in 2002. Thune lost by 524 votes.
Last month, Thune declined requests by House GOP leaders to compete for the House seat being vacated in two weeks by Rep. Bill Janklow (search), who resigned after being found guilty of second-degree manslaughter stemming from a traffic accident.
Thune said at the time that he thought he could make a bigger difference in the Senate.
"The truth is, the House isn't where the problem is," he said.
Thune, who won his last two House races with more than 70 percent of the vote, is expected to be able to raise ample campaign funds.
The Senate's Democratic leader since 1995 and a three-term senator, Daschle is a leading critic of President Bush and the GOP, which has accused him of being obstructionist. White House aides and GOP Senate leaders, who would be delighted to see him unseated, urged Thune to challenge Daschle.
But unseating the Senate minority leader is easier said than done, said American Enterprise Institute (search) political expert Norm Ornstein.
Although Daschle is a Democrat in a largely Republican state, he won his last race, in 1998, with 62 percent of the vote. Daschle is also more dynamic than Tim Johnson and has already raised a large sum of money by South Dakota standards, Ornstein said. Daschle has collected $4 million toward his target of $10 million.
A poll conducted last fall on a hypothetical Daschle-Thune match-up showed Daschle with 50 percent support compared with 44 percent for Thune. The poll, conducted by Mason-Dixon Polling and Research, had a margin of error of 5 percentage points.
"Even with Thune as the Republican nominee, defeating Daschle will be very difficult. A lot of South Dakotans like his clout," Gonzales said.
On Tuesday, Daschle shook off the latest challenge.
"I've had the good fortune to serve my state in a capacity that has provided real opportunities to put our agenda on the national agenda. I look forward to a good positive debate," he told Fox News. "I always go into every race with the belief that only the paranoid survive. So we'll be adequately aggressive."
In general, the Democratic Party may be affected by paranoia. Currently, the Senate is comprised of 51 Republicans, 48 Democrats and one Democratic-leaning independent. Many observers say Democrats are likely to lose ground in the Senate in November.
Hopes of reclaiming the Senate have been hurt by the planned retirement of five southern Democratic senators who were up for re-election, handing the GOP opportunities for gains. Two Republicans who were expected to fight for their seats in 2004 have announced plans to retire at the end of the coming term.
Losing the sitting Senate leader would certainly be a big symbolic defeat for Democrats, Gonzales said.
"If President Bush is re-elected and Daschle loses, it will just be icing on the cake for Republicans and they will be able to kick the Democrats while they're down the day after the election," he said.
A Daschle loss "would be very significant not only because he is considered a very effective leader, but also because that’s one seat they counted on holding when they had others in jeopardy," Ornstein said.
Of course, Thune should not count on Bush to shoo him in, Ornstein added. In 2000, South Dakota backed Bush by a 60-38 margin and is considered a safe bet for the GOP in 2004. But the president's popularity may not be enough.
"If you look historically in 1972 and 1984, when Republican presidents won landslide re-election bids, it didn’t seem to have any significant impact in terms of adding coattails for the House and Senate," he said.
Fox News' Alicia Acuna, Julie Asher, and The Associated Press contributed to this report.