Budget stalemate: Why America won't raise taxes

"Bennett was seen as part of the problem," says David Keating, the club's executive director. "We were the only group to spend any money – we spent about $200,000, which, when you think about it, is extremely cheap." Bennett was slow to perceive the danger, and wound up losing the primary contest to tea party favorite Mike Lee, who went on to win the general election. The Club for Growth also played a key role in defeating former Gov. Charlie Crist in the Florida Senate race and pushing former Sen. Arlen Specter of Pennsylvania out of the GOP and eventually out of Congress.

According to Mr. Keating, the total amount of money the club has spent on elections, through its various political arms, has nearly tripled in the past decade – from $8.7 million in the 2002 cycle to just over $23 million in the last cycle. And its overall influence may be far greater. Like Americans for Tax Reform – which pressures candidates to sign its "no new taxes" pledge during the campaign and then monitors their votes and public statements to make sure they comply – the club has become a kind of guardian of Republican values, whose stamp of approval (or disapproval) can be critical.

This time around, conservative activists are looking hard at GOP Sens. Richard Lugar in Indiana and Orrin Hatch in Utah. Notably, Mr. Lugar is one of the few Republican senators who has refused to sign ATR's "no new taxes" pledge. Keating notes that Senator Hatch, feeling the pressure, is now "voting to the right of most every senator." Still, he says, "you have to look at his whole record. We're not really sure if he's had a genuine change of heart."

One question is whether many grass-roots conservatives, particularly tea party conservatives, are driven more by antitax sentiments or by concerns about the deficit – and more important, if they'd be willing at some point to sacrifice one priority for the other. Leaders insist it's a false choice – that the best way to reduce the deficit is by slashing spending and stimulating the economy through lower taxes, and that you won't get one without the other. They also believe high tax revenues reduce the incentive for lawmakers to make hard spending choices.

"When countries have tried to reduce the deficit with tax increases plus budget restraint, it never works," says Norquist.

Yet tax cuts don't automatically lead to spending cuts: The growth of the tea party movement can be traced in part to frustration with the Republican Party's failure to rein in spending under President Bush – despite his many tax cuts – as well as anger at the Obama administration's policies.

"Quite frankly, the Republican Party for the last seven or eight years prior to the last election was pretty disappointing to small-government conservatives," says Mr. Armey.

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