Democrats spent Tuesday putting the Ethics Committee investigation into
Rep. Shelley Berkley in the best possible light, even as the case casts a public cloud over the Nevada Democrat’s Senate bid.

The race is taking place in Senate Majority Leader Harry Reid’s (D-Nev.) backyard, and it could prove decisive to his party’s ability to keep its hold on a chamber likely to be divided by one or two seats.

When asked by reporters Tuesday whether the investigation affects Berkley’s chances to win, Reid said, “No, I really don’t think so.”

Berkley is challenging appointed Sen. Dean Heller (R) in a presidential battleground state, and Democratic strategists said the investigation does little to change the fundamental dynamics of the race. But Nevada Republican strategists believe the committee’s decision on Monday may have irreparably damaged Berkley’s outreach to voters beyond her Las Vegas district — swing voters that will ultimately decide the election.

Allegations of wrongdoing have swirled around Berkley since the New York Times in September detailed her push to save a kidney transplant program at a hospital where her physician husband had a lucrative contract and preserve reimbursements for other kidney-care services. The story prompted the Nevada Republican Party to ask the nonpartisan Office of Congressional Ethics to review Berkley’s actions.

The issue has already been highlighted to voters via TV ads across the state. American Crossroads, a GOP-aligned super PAC, launched a significant ad buy last month to broadcast the issue. The Berkley campaign immediately responded with an ad of its own, a sign the campaign has been prepared for these developments for some time.

The latest news of a formal ethics investigation will no doubt be played up even more in ads up until Election Day.

“It will be a defining issue in that race,” Crossroads spokesman Nate Hodson said. “And clearly, given what we’ve already done, you can read the tea leaves.”

Democrats argued Tuesday that an ethics cloud has hovered over the race since last fall, and yet no evidence has surfaced that Berkley has been hurt by it.

“Republicans have been trying to make this an issue for nearly a year, and it hasn’t made a dent in the polls,” Democratic strategist Ed Espinoza said.

Zac Petkanas, a senior communications adviser to the Nevada Democratic Party and a former top aide to Reid, said no investigation will alter the fact that the economy will be atop voters’ minds in November.

“In a state struggling with the highest unemployment rate in the nation, this race will be about one thing: which candidate will stand up for Nevada’s middle-class families,” Petkanas said.

Berkley’s Clark County base will likely account for more than two-thirds of the general election vote. Her ability to attract voters beyond that base has been the focus of the race thus far, and every Republican in the state reached Tuesday said they think this development will hinder her ability to make inroads in Northern Nevada.

“I don’t think anyone thinks the race is over, but this is a pretty significant blow to Berkley,” GOP consultant Ryan Erwin said. “It won’t be easy for her to introduce herself to new voters with an official Congressional investigation under way.”

Berkley has already run weeks of ads in Washoe County, one of three counties Reid won in his highly targeted 2010 re-election race. Reid also racked up a huge win in Clark County that year, though few observers on either side expect Berkley to replicate those feats.

“The key for Democrats running statewide is to try to keep that Washoe County loss margin as small as possible, and this won’t help,” Reno-based GOP consultant Robert Uithoven said.

The committee’s formation of an investigative subcommittee postponed the release of a detailed report prepared by the ethics office that could shed light on the extent to which Berkley’s financial interests diverged from the needs of her constituents. One Democratic strategist noted that any other outcome Monday that resulted in a report being released could have offered Republicans even more ammo for ads, even if taken out of context, and that Monday’s announcement really changed little.

“Last week this story was that the ethics committee is looking into it,” the strategist said. “Today, the day after they came out with their decision, the story is still that they are looking into it.”

But with the Congresswoman from Las Vegas now running statewide, Republicans maintained this can only help Heller.

“I can think of a lot better ways for Shelley Berkley to introduce herself to voters,” longtime GOP consultant Jim Denton said.

Amanda Becker contributed to this report.