Former Wisconsin Governor Tommy Thompson is preparing to run for the U.S. Senate against incumbent Russ Feingold, according to several sources familiar with Thompson's thinking. Thompson has spent the past several weeks taking the steps any candidate must take in order to run for office -- he's evaluating staff, he's talking to fundraisers, and he's separating himself from his business interests.

Late last week, Thompson resigned from the Board of Directors of CNS Response, Inc., a health care data company. Thompson said the resignation was for personal reasons. A statement from Thompson, who has agreed to become chairman of the CNS Response advisory board, read: "I have nothing but the highest respect for the management and Board of CNS Response, and look forward to helping them advance this important medical technology."

"He's 75 percent there," says one source close to Thompson. Two others who have been talking to Thompson about a potential bid agreed with that assessment. But another Thompson insider cautioned that while Thompson is doing all of the things expected of a candidate-to-be, he will not make a final decision until after he returns from a family vacation over Easter. And it remains possible that Thompson will decide against a run.

A Public Policy Poll released Tuesday shows the potential race tightening. Thompson stands within three points of Feingold in a head-to-head matchup -- 47 to 44, with 9 percent undecided. A poll taken the same Democratic firm last November showed Feingold leading 50 to 41 percent.

Those numbers are encouraging to Republicans, but so is their internal polling. One recent GOP survey shows Thompson leading Feingold by 5 points. Polling by Scott Rassmussen shows Thompson and Feingold in a virtual tie.

Those close to Thompson, who also served as Health and Human Services Secretary under George W. Bush, have long been skeptical that he'd opt for a return to Washington as a senator. He's an executive, not a compromiser. And Thompson briefly considered running for governor in Wisconsin, a seat that is open with the retirement of incumbent Jim Doyle, a Democrat.

But Wisconsin is in dire financial straits. And Washington under Barack Obama has quickly become a place where one vote really matters.

Republicans aren't the only ones who believe Thompson will run. Feingold sent out a fundraising letter this week saying that it's "very likely" that Thompson will challenge him and trying to define his opponent. Feingold claims that Thompson, a partner in the powerful Washington law firm of Akin Gump Strauss Hauer & Feld, "has the DC lobbying crowd on speed dial and he will have significant resources from them to take this U.S. Senate seat away from the people of Wisconsin." Feingold has been taking shots at Thompson in his speeches around the state, too.

Thompson, who served four terms as Wisconsin governor from 1987-2001, remains popular in Wisconsin. Thompson and his advisers have been discussing the race for weeks and they have settled on a basic strategy for the race. The only question is whether he'll choose to implement it.

Update: The Wisconsin GOP is not letting Feingold define Thompson without a fight. This morning the state party put out a press release portraying Feingold as a hypocrite on special interests. The GOP claims that Feingold has accepted millions in "special interest" money over the years, including $1,703, 920 from lawyers and lobbyists, nearly $1 million from labor and another $1 million from what they call the "Finance, Insurance and Real Estate Sector."

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