By Tim Reid
WASHINGTON (Reuters) - The Republican Party's traditional kingmakers are losing a battle with anti-government Tea Party populists to choose the candidate who will challenge President Barack Obama in the November 2012 election.
For the first time in almost 50 years, the party's leaders fear they do not have the power to anoint the candidate they believe has the best odds of beating the Democratic opponent, according to senior strategists, former Republican lawmakers and analysts.
Instead, the Tea Party wing of the Republican Party is driving the debate and ultimately the decision, they said, which could have consequences that reach far beyond 2012.
"You used to have an establishment, which could designate a candidate," said Bruce Bartlett, a former domestic policy adviser to President Ronald Reagan.
"In 2000, the establishment collectively decided George W. Bush was the guy, and just picked him. I don't think they can do that this time. Things have changed."
At stake is not just the White House but the soul of the Republican Party. It could change the face of Republican leadership, drive out the few remaining moderates and force socially liberal business conservatives to rethink their political affiliation.
The struggle for control over the party's nominating process is personified by former Massachusetts Governor Mitt Romney, backed by much of the party's more mainstream business traditionalists, and Texas Governor Rick Perry, a favorite of the party's anti-establishment wing.
Perry has catapulted to the top of national polls just a month after entering the contest, eclipsing Romney, thanks to strong support from Tea Party-affiliated fiscal and social conservatives.
That has occurred even as polls targeting a broader spectrum of America -- one that includes independents -- give Romney a better chance of beating Obama.
Not since Republicans nominated the conservative libertarian Barry Goldwater in 1964, who defeated the more establishment candidacy of Nelson Rockefeller, has the party leadership failed to orchestrate victory for the candidate it viewed as the most electable.
Establishment Republicans now fear their chances of defeating a vulnerable Obama could be dashed by the party's grass-roots primary voters, who show every sign of siding with a hard-line conservative, one whose positions on everything from monetary policy to climate change might alienate the moderates and independents crucial to victory.
"The Tea Party types just might be able to control the nominating process," said Allan Hoffenblum, who first began advising Republican candidates in the late 1960s.
"Do we come up with a Barry Goldwater or a George McGovern where the more radical base chooses the candidate?" Hoffenblum asked. "That in my view is the only way Obama can win."
It is still early in the Republican primary process. The candidates have only engaged in two major debates and the first nominating contest is not until January, in Iowa.
It is also still unclear how Perry, a champion fund-raiser in Texas, will fare under a national spotlight.
As Texas governor for more than 10 years, he has a substantial legislative record to run on. He also has a rhetorical tendency to shoot from the hip, and risks alienating seniors after describing Social Security, the government pension system, as an unconstitutional "Ponzi scheme."
BUSINESS WING VERSUS TEA PARTY
Stu Rothenberg, a veteran political analyst, described the Republican Party as fundamentally split between the "country club business wing" and "the social conservatives and Tea Party folk who are distrustful of the establishment, distrustful of everything and anything and have contempt for Washington."
"The business wing is more comfortable with Mitt Romney," he said.
If someone like Rick Perry wins, "it reminds us that the Republican Party is quite a conservative party, all the energy is on the Tea Party side and the anti-Washington wing has grown," he said.
The Republican Party's big donor base -- the business and Wall Street leaders who can fuel a national campaign -- has not decided who will win its support. Those donors will give money to the candidate they think can pose the strongest challenge to Obama, a determination they have not yet made.
THIN ANTI-ESTABLISHMENT HISTORY
Grass-roots activists have driven nominating contests before -- but not to great success.
In fact, both cases -- Goldwater in 1964 and liberal Democrat McGovern in 1972 -- led to landslide defeats, with neither candidate able to attract more mainstream general election voters.
Republican primary voters tend to be more conservative and activist than the party's more mainstream wing.
Romney's supporters come from the mainstream wing, and include many on Wall Street and in business. But that group, according to Hoffenblum, accounts for about only 25 percent of Republican primary voters.
One former senior Republican Capitol Hill aide, speaking on condition of anonymity, said as things stand today, "there is no dominant element within the party equal or even close to what the Tea Party is."
(Editing by Peter Cooney)