US Sen. Lisa Murkowski concedes Alaska primary race to Joe Miller

ANCHORAGE, Alaska – Sen. Lisa Murkowski was booted from office in the Republican primary Tuesday by a little-known conservative lawyer in arguably the biggest political upset of the year.

Joe Miller, backed by Sarah Palin and the Tea Party Express, became the latest newcomer to the national political stage to take down an incumbent in 2010 amid deep dissatisfaction with the Washington establishment.

Miller's win was a major victory for the tea party movement and marked the first time it had defeated a sitting senator in a primary.

Tea partiers had knocked off Utah Sen. Bob Bennett at a state convention in May, and emboldened tea partiers now have set their sights on Delaware where they are backing Christine O'Donnell against the more moderate Rep. Mike Castle in the GOP Senate primary.

Murkowski is the third senator to lose this year, along with Bennett and Arlen Specter, D-Pa.

Murkowski trailed Miller, a Fairbanks attorney, by 1,668 votes after the Aug. 24 primary. Election officials began counting absentee and outstanding ballots Tuesday, and Murkowski made slight gains. But after more than 15,000 ballots were counted, she remained 1,630 votes behind.

"We all know that this has been a long week, a terribly long week," she said at campaign headquarters while conceding. She said that while there were still outstanding votes, "I don't see a scenario where the primary will turn out in my favor, and that is a reality that is before me at this point in time."

"And for that reason, and for the good of the state of Alaska ... I am now conceding the race for the Republican nomination."

The stunning result was a huge validation of the political power of Palin as the former Alaska governor has been playing kingmaker in midterm elections ahead of a potential 2012 White House run.

Miller, 43, is an Ivy League-educated lawyer, West Point graduate and decorated Gulf War veteran who cast Murkowski as too liberal and part of the problem in an out-of-control Washington. It is a campaign strategy that has helped oust other incumbents this year and that Republicans will employ again in November as they look to take back Congress.

Reached by phone in Fairbanks, Miller told The Associated Press that the answer to the country's financial solvency crisis is to transfer power back to the states.

Federal aid has been considered an industry in Alaska, but the government's impending financial crisis will eventually force a reduction in funding to the state, he said.

"We have to be prepared for that, and the way to do it, of course, is to progressionally transfer holdings of the federal government to us," he said. "And of course, also by reducing federal regulatory burdens over the lands that we do control so that we can develop them more freely and more economically."

Murkowski has proudly touted her seniority after eight years in office, and said her roles on the appropriations and energy committees put her in a strong position to ensure Alaskans' voices are heard. Alaska has long been heavily reliant on federal money to run — a legacy largely carved out by former Sen. Ted Stevens before his death in an August plane crash.

After keeping a low profile for much of the race, Palin recorded a robocall for Miller in the campaign's final days and touted him as a "man of the people" on her Facebook page. She also repeated a claim that Murkowski had waffled on her position on repealing the federal health care overhaul — claims the senator has called false.

Palin has been on a losing streak as of late with her candidates faltering, and many were expecting similar results in Alaska with Murkowski holding such a name-recognition and fundraising advantage. Palin also still remains a highly divisive figure in her home state.

"Do you believe in miracles?!" Sarah Palin tweeted Tuesday night. "Congratulations, (at)JoeWMiller! Thank you for your service, Sen. Murkowski. On to November!"

But as the results began coming in on election night, it became increasingly clear that Miller connected with the voters and tapped into anti-incumbent anger among Republicans.

Aside from a failed legislative bid in 2004, the Kansas-raised Miller had no experience running in political races before jumping into the race to take on Murkowski. He is friends with Sarah and Todd Palin, and they both endorsed him.

Miller also had the blessing from within the tea party crowd. The California-based Tea Party Express said it spent nearly $600,000 to help Miller — most of that in the race's final weeks, when Miller's camp said it sensed momentum was on its side and that Miller would win.

The Tea Party Express' PAC, Our Country Deserves Better, tweeted Tuesday night: "Murkowski concedes!!! Thanks to all who helped make this possible. A great moment for the movement."

Palin and the Murkowski family have a complicated history.

Palin trounced Murkowski's father, Frank, in the 2006 gubernatorial primary — the race that would launch her national political career. Last year, she said she'd raise money for Lisa Murkowski, and even contributed to her campaign, quieting widespread speculation that Palin would challenge Murkowski for the seat. But the women have clashed on issues like health care, though they've denied any bad blood between them.

Murkowski has fought back against Miller and Palin's claims. A radio ad on the election's eve called Miller out as twisting the truth about Murkowski's position on the federal health care overhaul. Miller has stood by his statements.

"Alaskans deserve to know the honest truth," she said, "and they haven't gotten it from Miller."

The race was disrupted when Stevens died in a plane crash, with both candidates briefly suspending campaigning.

Murkowski was appointed to the Senate at the end of 2002 by her father and won her first term in 2004.

She said she was proud of the campaign she ran, which she called "honest" and "upright." She said it stayed focused on the issues and the "high road."

Previously, she had criticized Miller for running an unfair fight.

"This was not a race about Lisa Murkowski," she said during her concession speech. "This was a race about Alaska."

During a speech in which her voice wavered at times, she said confidently that once she completes her term, "I'm coming back home."

"I'm looking forward to coming back home with my family and looking forward to building this great future, a great future that will not only be with my family but helping to fulfill Alaska's promise, because there's still so much work that remains to be done."

"You are WHO I AM," she told Alaskans.

Miller will face Democrat Scott McAdams, a small-town mayor, in the November general election.

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Associated Press writers Becky Bohrer in Juneau and Rachel D'Oro and Mark Thiessen in Anchorage contributed to this report.