By Nick Carey and Eric Johnson
INDIANAPOLIS (Reuters) - Senator Richard Lugar, a 35-year Senate veteran and leading foreign policy voice, was soundly defeated in the Indiana Republican primary by a Tea Party-backed rival on Tuesday, jolting the American political establishment during a volatile election year.
Lugar, 80, was the first Senate incumbent ousted this year and his defeat showed that the anti-Washington, small government Tea Party movement is alive and well.
The veteran Senator lost to Indiana state Treasurer Richard Mourdock by more than 20 percentage points, according to preliminary results from the state election division.
"Lugar's defeat is a wake-up call from the Tea Party to the Republican establishment," said Ford O'Connell, a Republican strategist and chairman of CivicForum PAC, which endorsed Mourdock and contributed to his campaign. "It will make them think about how to proceed, not just in what they say but how they vote in the run-up the (November) election."
In a graceful concession speech, Lugar said he would use the remainder of his term to try to achieve some results in a gridlocked Congress.
"I look forward to what can be achieved in the Senate in the next eight months despite a very difficult national election atmosphere."
An emotional Mourdock, cheered by hundreds of ecstatic supporters, many decked out in red "Mourdock" T-shirts, called Lugar a "great Hoosier," the nickname for an Indiana resident, and "a great American."
"Hoosiers want the Republican Party to take a more conservative track in the United States Senate," he said.
The outcome of the race gives Democrats an unexpected opportunity to win a Republican-held seat in November's elections. Democrats are clinging to a 53-47 advantage in the Senate but have many more incumbents standing for re-election than Republicans.
Polls had shown that if Lugar won the primary he would easily be re-elected in November but if Mourdock won it would be more competitive.
Mourdock's Democrat opponent, Joe Donnelly, immediately began trying to paint Mourdock as confrontational and too conservative even for Indiana, a traditionally Republican state.
Mourdock said his campaign now would focus on Donnelly's support for Obama's policies.
"We are going to make that record clear," he said, "and it's not going to be accepted by the voters of Indiana."
COMPROMISE OUT OF FASHION
When Lugar last ran for re-election in 2006, he was seen as so invincible that Democrats did not field an opponent.
But the soft-spoken senator, who is the senior Republican on the Foreign Relations Committee, saw the atmosphere of Congress change dramatically to gridlock in recent years.
After the arrival of the conservative insurgent Tea Party movement on the U.S. political scene, Lugar's long track record of bipartisanship and foreign policy expertise were out of fashion.
His votes for Obama's Supreme Court appointees Sonia Sotomayor and Elena Kagan riled conservatives, as had the fact that he had not lived in Indiana since 1977. Some voters said they voted against Lugar because he was out of touch with the state.
Mourdock received a major boost from grassroots Tea Party support, with thousands of volunteers going door to door to get out the vote.
Lugar was seen as waging a lackluster campaign, refusing to shift his views in a more conservative direction and continuing to talk about foreign policy issues seen as remote from the economic concerns of some voters.
"How do I feel?" said Fred Pfenninger, 62, a collection attorney who supported Lugar. "The greatest elected official in Indiana history has just been defeated by a guy who is not nearly as competent."
Among those paying tribute to Lugar's bipartisanship over the years was President Obama, who said in a statement that while he and the senator "didn't always agree on everything, I found during my time in the Senate that he was often willing to reach across the aisle and get things done."
During the campaign, Lugar bemoaned the amount of money spent on the race by outsiders, most of it on Mourdock.
Super PACs, the unregulated vehicle for a surge in campaign financing this year, poured about $4.6 million into the Indiana Senate primary, according to filings with the Federal Election Commission.
More than $3 million of that total went for ads supporting Mourdock or attacking Lugar, paid for by conservative groups such as Club for Growth, the National Rifle Association and Koch Industries-backed FreedomWorks For America.
While Lugar was backed by popular Indiana Governor Mitch Daniels and Senate colleague John McCain, many conservatives backed Mourdock, including former Republican vice presidential nominee Sarah Palin and former presidential candidates Michele Bachmann and Rick Santorum.
If Mourdock wins in November he will be more confrontational than Lugar, said Jennifer Duffy, senior editor for the nonpartisan Cook Political Report in Washington.
"Given that Mourdock has said on the campaign trail that he would be a very partisan member of the Senate," she said, "I think that the Senate will become a more partisan place with Mourdock as a member if he wins."
(Reporting by Nick Carey and Eric Johnson; Additional reporting by Alina Selyukh and Thomas Ferraro; Editing by Greg McCune and Lisa Shumaker)