His fellow Republicans and others hardly knew what to make of Homeland Security Secretary Tom Ridge's apparently off-the-cuff remark. At a Florida town meeting earlier this month, Ridge responded to a question from the audience with a startling comment about illegal immigrants. "As a country, we have to come to grips with the presence of 8 to 12 million illegals, afford them some kind of legal status some way," he said. Vague as it was, this was the first time an administration official had raised the issue -- had even acknowledged the problem of illegal immigrants, much less talked about legalizing them -- in more than two years.

Was Ridge's aside an unguarded ad-lib, or could it have been a trial balloon authorized by the White House, to test the waters on immigration reform? Opponents of reform thought it was real and immediately leapt to the barricades. Leading anti-immigration congressman Tom Tancredo, a Colorado Republican, went so far as to call for Ridge's resignation. The White House ducked the issue, announcing cryptically that its immigration policy was "under review." But in the 10 days since, it has been signaling quietly -- dropping hints at news conferences, meeting behind the scenes with reform advocates -- that it may indeed be considering some kind of policy initiative.

Two years after 9/11, the immigration issue is back on the table, and surprisingly enough, the debate has picked up almost exactly where it left off when the attacks abruptly ended all discussion of reform. With fearful memories fading and the economy on the upswing, businesses that rely on foreign labor are again worrying about shortages, and many are clamoring for new guest-worker programs. Meanwhile, unions and their Democratic allies sense that it may again be safe to stand up for newcomers' rights, and they, too, are arguing for higher immigration quotas, along with measures that would allow illegal workers already in the country to earn their way in out of the shadows and become citizens. All the Democratic presidential hopefuls have raised the issue on the stump. And several bills, some Republican, some Democratic, are circulating in Congress.

The difference this time around is the division within the Republican Party. The flap over Ridge's remark was a symptom of a far more significant conflict. Republicans, even more than Democrats, have long been ambivalent about immigration; business and libertarians are generally for increasing the number of immigrants allowed in each year, rank-and-file voters more often for lowering it. In the past year or so, that internal divide has deepened and intensified.

Part of what's widening the rift is fear of terrorism, part is concern about the economy. Though there's no evidence that immigrants make the nation less safe or "steal" American jobs, anti-immigration Republicans have done a brilliant job of exploiting the public's anxiety. In the years since 9/11, Tancredo's restrictionist Congressional Immigration Reform Caucus has more than quadrupled from some 15 members to 69. Now that reform is again under discussion, they frequently find themselves at odds with more immigrant-friendly Republicans, and the conflict is shaping up as a potential battle for the soul of the party. If the restrictionist wing prevails, there could be dire consequences not just for the GOP, but for the nation.

The immigration issue now cuts a fault line clear through the Republican -- and conservative -- universe. The Wall Street Journal is staunchly in favor of higher ceilings, while the Washington Times and National Review carry the banner of restriction. The Cato Institute is for liberalization; the Center for Immigration Studies, also funded by conservatives, favors cracking down harder. (My own right-of-center think tank, the Manhattan Institute, is split down the middle.) Though it would cost businesses more to hire legal migrants, many believe expanding quotas would make for a more reliable workforce, and they are often the driving force in negotiations to create new guest-worker programs. But many Republican voters -- the Pat Buchanan wing of the party and others -- are up in arms over what they see as granting benefits, whether driver's licenses or green cards or food stamps, to people they think have broken the law. When pollsters probe for "intense opposition to immigration" -- the kind likely to translate into votes and other action -- Republicans are far more adamant than Democrats: According to a recent poll by the Pew Research Center, 54 percent "completely" agree that yearly ceilings should be lowered.

So, too, in Washington. Pro-immigrant GOP legislators, many from border states -- Sens. John McCain and John Cornyn , Reps. Jeff Flake and Jim Kolbe -- are pressing for measures to expand the legal labor supply and restore the rule of law in heavily immigrant states by rerouting the illegal flow through legal channels. No fewer than three GOP-sponsored guest-worker bills are circulating on the Hill, along with a measure that would grant legal status to high-school graduates who entered the country illegally as young children.

Meanwhile, the Tancredo faction is pushing in exactly the opposite direction, pressing to fortify the border and augment interior enforcement. One of the most controversial restrictionist measures would actively involve local police in enforcing immigration law and arresting people who have no documents -- an unprecedented practice opposed by many police departments on the grounds that it would make it harder for them to do their jobs in immigrant communities.

The pro-immigration wing of the party makes by far the more persuasive case. After all, as they point out, globalization makes immigration inevitable. We can't just turn off the spigot -- and even if we could, the costs of doing so would outweigh the benefits. Immigrants bring talent and energy, help stem the tide of U.S. companies exporting jobs overseas, and are revitalizing urban neighborhoods from Flushing, N.Y., to South Central Los Angeles. A large influx of the kind we're experiencing today -- 1.3 million people a year, roughly one-quarter of them illegal -- inevitably brings dislocations, and we need to deal with those problems. But if global forces of supply and demand make something like this influx unavoidable, surely it is preferable that it be legal rather than illegal -- that we bring the entire flow above ground where we can monitor and regulate it.

The irony is that by opposing a more rational, market-oriented immigration policy, the restrictionists may be handing the issue to the Democratic Party. As Democrats and Republicans in favor of higher ceilings realize, bipartisan cooperation is the only way, in the current climate, to muster the votes to pass legislation. More importantly, genuinely solving the problem requires meeting both business and union concerns: providing a steady supply of workers while also guaranteeing them market wages and labor protections so that they don't undercut native-born laborers.

Neither a guest-worker program (a Republican idea that Democrats endorse only under duress) nor a measure allowing illegal workers already here to come in from the shadows (the Democrats' quid pro quo, accepted grudgingly by Republicans) would work alone. Only the two together can hope to eliminate our ever-growing underground workforce, putting industries from agriculture to the hotel business back on a legal footing. But if Tancredo and his allies succeed in blocking that kind of double-barreled reform, pro-immigration Democrats will seize the issue and make it their own -- and eventually, chances are, polarize the debate beyond all hope of a bipartisan solution.

Indeed, this may already be happening in Washington. The most promising immigration legislation introduced this fall was a measure known as the AgJOBS Bill, which would create a new guest-worker program and a path to legalization for up to half a million Mexican farmhands. A balanced bill with some four dozen Senate sponsors, half of them Democrats and half Republicans, it stood an excellent chance of passing -- until it was held up in the Senate's immigration subcommittee by chairman Saxby Chambliss, a Georgia Republican edging toward the restrictionist camp. Meanwhile, negotiations to produce a similar package for service-sector workers may be foundering on partisan disagreement; would-be Democratic co-sponsors are threatening to bolt, and are thinking instead about measures with far more expansive labor rights and less concern for law enforcement.

Worse still for the GOP, Tancredo and his allies could be handing the political future to the Democrats. Latino voters may or may not be a significant factor in 2004: Restrictionists point out that none of the most heavily Latino states -- New York, California, Texas -- are likely to be up for grabs. But even Bush's lead pollster, Matthew Dowd, has long argued that the Republican Party needs to win at least 40 percent of the Hispanic vote to remain competitive. And poll after poll is unequivocal. Immigration is a defining issue for Latino voters, with support for expanded quotas and legalization of those already in the country running in the 80- to 90-percent range.

The White House can make a difference if indeed it comes forward with a proposal, throwing its weight behind the pro-immigration wing of the GOP. But even then, an effective solution would need to be bipartisan -- and the challenge for the president will be to lead a broad-based effort. If he fails -- if the debate turns bitter and grandstanding -- it's possible that nothing will pass until the Democrats retake Congress. And then, if and when something does get through, it will almost surely be skewed sharply leftward, serving neither business interests nor the rest of the country.

Does the national Republican Party want to go the way of the California GOP, which waged war on immigrants and lost the reins of power for nearly a decade? Do Republicans want to walk into the future tagged not just as anti-black, but also anti-immigrant? If the merits of the issue made it necessary, party leaders might rightly choose to pay that price. But they don't. We all, Democrats and Republicans alike, have a stake in sensible, bipartisan immigration reform that reflects the realities of the global marketplace and enhances our security.

Tamar Jacoby is a senior fellow of the Manhattan Institute and the editor of "Reinventing the Melting Pot: The New Immigrants and What It Means To Be American," to be published by Basic Books in February.