Sens. Jim DeMint (R-S.C.) and Ted Stevens (R-Alaska) clashed late last year during a closed-door luncheon as they debated whether Republicans should take a strong stand against earmarking.

DeMint, the leader of the conservative Steering Committee, called for a renewed emphasis to rein in pet projects, angering Stevens, the notorious earmarker and senior appropriator from Alaska.

Calling for a meeting was an “obvious message” by Stevens that he wanted DeMint removed as chairman because of the junior conservative’s relentless push against earmarks, the source said, asking for anonymity because the talks generally occur in confidence.

“He certainly spoke up in some of our Steering Committee lunches and expressed his displeasure,” DeMint said in a recent interview.

“I’ve made a lot of enemies within my own party, but I think some of these folks have the responsibility to show what it means to be a Republican,” said DeMint.

Aaron Saunders, a spokesman for Stevens, said his boss was “part of a group of several senators who were simply discussing the general management of the Steering Committee.”

Saunders said Stevens “made no such statement” about DeMint’s ouster, and DeMint could not recall whether the Alaskan sought to remove him from the post. Steering Committee staff declined to comment.

The exchange illustrates how earmarking funds back home is becoming the most divisive issue facing congressional Republicans. The fight largely pits junior conservatives — arguing that the failure of Republicans to aggressively fight earmarking is preventing the GOP from reclaiming the mantle of fiscal responsibility — against party veterans, who say that it is their prerogative to choose funding priorities so long as overall funding levels are constrained.

Earmarking is expected to arise during Wednesday’s annual retreat of Senate Republicans, but it’s unlikely that the conference will take a strong stand on the matter because of support for earmarks by the leadership.

That approach differs from the House, where Republican Leader John Boehner of Ohio said he would press his colleagues at a Thursday retreat in West Virginia to take a more aggressive line this year against earmarks. Still, Boehner faces the challenge of rallying his caucus around that position since members — particularly ones in tight reelection races — point to their earmarks as a way to show their effectiveness in Congress.

The issue is critical as Republicans finesse their election-year message. Conservatives appear to have support from leading presidential candidates and President Bush. But after complaints from both parties, Bush appears unlikely to issue an executive order he was considering to eliminate most of the 9,000 earmarks included in the recently enacted spending law.

One proposal in the House, spearheaded by Reps. Mike Pence (R-Ind.), Jeff Flake (R-Ariz.) and Jeb Hensarling (R-Texas), would put a moratorium on earmarking within their conference for the rest of the year. The conservatives plan to push the House GOP conference to rally around their plan at their retreat.

“This would be pure electoral gold for Republicans,” Flake said, adding that Democrats were not likely to stop earmarking in response to a GOP boycott.

Pence, who has requested earmarks in the past, said the pledge would show the American people that House GOP members were willing to  “put set aside the priorities of our districts for a year” in the name of getting spending under control.

He added that the commitment would create a “bright line choice” between Democrats and Republicans on spending and that the Senate would eventually feel the pressure to follow suit.

Even though the earmark push faces resistance within the GOP, DeMint and other conservatives say it would be wildly popular with the public and bring the party back to its core roots of fiscal conservatism.

“I think earmarks have basically destroyed the Republican Party,” DeMint said.

Meanwhile, on the Senate’s first full day of 2008, Senate Republican leaders Tuesday called for renewed bipartisanship in an attempt to push through a variety of measures during the election season.

Senate Minority Leader Mitch McConnell (R-Ky.), who sits on the Appropriations Committee and secured tens of millions for projects back home in the recently enacted spending law, said that on “behalf of Senate Republicans, I want to begin this session by extending the hand of cooperation to our colleagues on the other side of the aisle.”

The call for bipartisanship is likely to be part of the election-year message spearheaded by Sen. Lamar Alexander (R-Tenn.), the new chairman of the Senate GOP conference who also sits on the Appropriations Committee. Alexander, who wants to discuss bipartisanship at Wednesday’s retreat, sent an e-mail last week to Senate GOP offices asking for one or two examples of legislation each Republican has proposed that have garnered Democratic support.

That emphasis has raised the eyebrows of some conservatives who say the Republicans will win in 2008 if they show stark differences between themselves and Democrats, rather than blurring the lines of distinction. They say the fight against earmarks is exactly what can distinguish the two parties and energize the base heading into November.

“I think it’s puzzling to many after the 2006 election that the old bulls in the Senate haven’t figured out that they’re in the minority, and that passing legislation and cooperation with Democrats only helps Democrats, not the Republicans,” a conservative GOP aide said.