Convicted Stevens holds slim lead in Senate race

WASHINGTON (Reuters) - The fate of a convicted felon will help determine the size of the Democrats' expanded power in the U.S. Senate, and may provide a new job opportunity for failed vice presidential nominee Sarah Palin.

After being found guilty of political corruption last month, Republican Sen. Ted Stevens, 84, of Alaska clung to a narrow lead on Thursday in his bid to win an eighth term.

With state election officials sorting through thousands of absentee ballots, a winner was not expected to be announced for at least several days.

If challenger Mark Begich pulls it out, it would increase to seven the number of Senate seats Democrats have gained from Tuesday's national election, boosting their majority to 58 in the 100-member chamber.

Two other Senate races in Tuesday's election have also not yet been decided, both involving incumbent Republicans -- Norm Coleman in Minnesota and Saxby Chambliss in Georgia.

If Democrats capture all three, after picking up a closely contested Senate seat in Oregon late on Wednesday, they would have for the first time in 30 years a Senate majority big enough to pass legislation over Republican procedural hurdles.

But Democrats say they don't expect to hit 60. They note that to reach a "filibuster-proof majority" they would need a come-from-behind victory in Alaska, win a recount in Minnesota and capture an anticipated run-off in Georgia.

If Stevens prevails and returns to the Senate, Democratic and Republican leaders have promised to move to have him expelled because of his conviction on seven counts of lying on Senate disclosure forms by failing to report more than $250,000 in home improvements and other gifts from an oil executive.

That would provide an open seat that Palin, Alaska's first-term governor, could run for in a new election that could be called within months.

"I have no idea what Palin will do, but leave it to Republicans to always keep things interesting," one party aide said.

Another party aide said, "If she ran for the Senate she would win. But I don't think she will do it. She'd go from being a popular governor to a junior member of the Senate."

Palin ran for vice president as a Washington outsider and political maverick. Popular yet polarizing, she is viewed as a potential 2012 White House contender.

Stevens has vowed to appeal his conviction and has drawn support from fellow Alaskans who feel indebted to his more than four decades of service in the Senate.

"If Stevens wins re-election, he may resign. He would be going out on his terms. He wouldn't be kicked out," a Republican aide said. "He'd feel vindicated by his own constituents."

Two U.S. senators must soon be replaced because they have found new work -- U.S. President-elect Barack Obama of Illinois and Vice President-elect Joe Biden of Delaware. The Democratic governors of their states are expected to replace them with Democrats.

Democrats in the 435-member House of Representatives also increased their majority in Tuesday's election, picking up 20 seats to reach 255. A half dozen races have yet to be decided.

(Editing by David Wiessler)