For Romney, bad news comes in waves

Republican presidential candidates (R-L) former Massachusetts Governor Mitt Romney, former U.S. Senator Rick Santorum (R-PA) and Texas Governor Rick Perry arrive on stage to participate in a Republican presidential candidates debate in Myrtle Beach, South Carolina, January 16, 2012.

COLUMBIA, South Carolina (Reuters) - For Mitt Romney, a miserable week in South Carolina of dodging questions about his wealth and income taxes got worse on Thursday.

The former Massachusetts governor's most bitter rival in the race for the Republican presidential nomination, Newt Gingrich, won the endorsement of Texas Governor Rick Perry, who ended his bumbling campaign in Charleston.

Perry's support in recent polls has been minimal, but his endorsement could be enough to give Gingrich a significant boost in forming a coalition of conservatives to challenge Romney in Saturday's primary in South Carolina - the third official contest of this presidential campaign season.

In Iowa, meanwhile, Republican Party officials took away Romney's narrow win in the January 3 caucuses that helped propel him to a big victory in New Hampshire's primary a week later. Those victories had made him the clear front-runner in the battle over who will face Democratic President Barack Obama in the November 6 elections.

The officials said that after examining ballots from Romney's eight-vote victory in Iowa over former Pennsylvania senator Rick Santorum, they had determined that Santorum actually topped Romney by 34 votes.

However, the officials did not declare Santorum the winner because they did not receive results from eight of the state's 1,774 precincts.

The announcement meant little in the overall race but was a psychological blow to Romney's campaign, which released an announcement declaring the Iowa caucuses a "virtual tie."

Santorum, hoping to rally the same conservative evangelical Christians that Gingrich is courting in South Carolina, hailed the new Iowa results as a "huge upset."

"The narrative that Governor Romney and the media have been touting of 'inevitability' has been destroyed," Santorum spokesman Hogan Gidley said in a statement. "Conservatives can now see and believe they don't have to settle for Romney, the Establishment's moderate candidate."

Suddenly, Romney's bid to make history by winning the first three contests in the campaign's state-by-state nomination fight is looking more like a scramble to avoid losing two of three.

On Thursday a new Reuters/Ipsos poll showed a tightening race in South Carolina, suggesting that Gingrich might be gaining traction in trying to cast Romney -- a former private equity executive worth an estimated $270 million -- as an elitist who is out of touch with the concerns of most Americans.

Romney has had a 15- to 20-point lead over the field in polls by various organizations in South Carolina, but those margins have been shrinking during the past two weeks.

The Reuters/Ipsos online poll of likely voters in Saturday's primary showed Romney with a 12-point lead, 35 to 23 percent over Gingrich. Santorum had 15 percent.

The poll, taken before Perry dropped out, also showed Perry with 6 percent. It had a "credibility interval" -- similar to a margin of error -- of 4.5 points for each candidate's result.

So if Gingrich can pick up most of Perry's backers, he is within striking distance of Romney, the poll's findings indicated.

Analysts said that with the withdrawals of Perry and Minnesota congresswoman Michele Bachmann, the divided conservatives who make up much of the party's electorate and believe that Romney isn't conservative enough are down to choosing between Gingrich and Santorum.

"Mitt Romney has lived off the multi-candidate conservative field, and now that's shrinking dramatically," said Lee Miringoff, director of the Marist poll at Marist College in Poughkeepsie, New York. "That works to Gingrich's benefit right now, given that he is the strongest competitor to Romney in South Carolina."

Perry's endorsement of Gingrich was no surprise. The two are longtime friends and Gingrich wrote the forward for Perry's book, "Fed Up: Our fight to save America from Washington."

In his announcement Thursday, Perry called Gingrich a "conservative visionary who can transform our country."

At a campaign stop in Beaufort, South Carolina, Gingrich praised Perry and said, "A lot of good things are happening" for his campaign.

He said he could win the state "if we can convince every conservative voter in South Carolina to vote for me as the only practical way to stop a Massachusetts moderate," Romney.

ALLEGATIONS BY GINGRICH EX-WIFE

The political drama unfolding in the last two days before the South Carolina vote did have some uncomfortable news for Gingrich.

ABC News said it planned to broadcast an interview late Thursday with the thrice-married Gingrich's second wife, Marianne, who was married to Gingrich when he began an affair with a congressional aide, Callista Bisek, in the late 1990s.

Gingrich divorced Marianne and married Bisek, who has been at his side throughout the campaign.

In the interview, Gingrich's former wife said he asked her to have an "open marriage," in which she would allow him to continue having the affair. She has made similar accusations before.

Gingrich said Thursday, "I'm not going to say anything about Marianne," adding that his two daughters from his first marriage had issued statements defending him.

In Beaufort a man asked Gingrich about his character, drawing hisses from a crowd of Gingrich supporters.

"Look, I think that is a decision you have to make," Gingrich said, adding that he had spoken publicly about seeking God's forgiveness. "I have been very open about the mistakes I've made."

ROMNEY STAYS LOW-KEY

For a frontrunner less than 48 hours from an important vote, Romney drew relatively small crowds and was low-key heading into Thursday night's debate for the remaining Republican candidates: Romney, Gingrich, Santorum and Texas congressman Ron Paul.

He continued to deflect questions about his finances, a tactic he has used since creating a stir on Tuesday by acknowledging that his federal income rate was "around 15 percent" -- well below the rates paid by most wage-earning Americans.

Romney's admission suggested that much of his income comes from capital gains on his investments. Under the U.S. tax code, capital gains are taxed at 15 percent, while the tax rates on wages go as high as 35 percent.

At the time, Romney was under pressure from Gingrich and Perry to release his income tax returns, which Romney has long been reluctant to do.

Gingrich and Perry questioned whether Romney's reluctance meant he was hiding something.

Perry has released his returns annually for years; Gingrich promised this week to release them on Thursday, but had not by late Thursday afternoon. Gingrich has said that his income tax rate is 31 percent.

Romney's returns could shed light on his vast financial holdings, including investments he holds though Bain Capital, the private equity fund he founded in 1984 and left in 1999.

Analysts said that in Thursday night's debate Romney -- who stammered occasionally during a Monday night debate when asked about his finances and his tax returns -- needed to do a better job dealing with such questions.

Romney has agreed to release his tax returns but not until April, when most of the state primaries in the nomination battle will be over.

When asked about his tax returns on Thursday, Romney said, "You'll hear more about it -- April.

(Additional reporting by Karen Brooks in Austin, Texas, and Susan Heavey and Patricia Zengerle in Washingtob; Editing by David Lindsey and Jackie Frank)