RNC fractures amid spending dust-up

Republican National Committee Chairman Michael Steele, who is already under attack for his handling of party finances and lackluster fundraising, is facing a new threat to his leadership: an independent GOP group spearheaded by some party luminaries that will compete for campaign dollars.

Steele shrugged off calls for his resignation Monday, but then handed his critics perhaps even more ammunition by suggesting that he was being held to a higher standard because he is the first African American to lead the party.

Adding to the committee’s woes, RNC Chief of Staff Ken McKay resigned Monday following a controversy over $2,000 the party spent entertaining donors at a West Hollywood sex-themed nightclub. It was uncertain Monday whether McKay was pushed out or decided to leave on his own.

It was also revealed Monday that a prominent donor, Sam Fox, the former ambassador to Belgium and a strong supporter of George W. Bush, had resigned from the committee’s fundraising board. The news was first reported by the newspaper and website Politico.

As the committee grappled with the developments Monday, GOP power brokers such as former White House counselors Karl Rove and Ed Gillespie were ramping up a new political effort, American Crossroads, dedicated to electing Republican candidates this fall and beyond. The group hopes to raise more than $50 million this year. Former RNC Chairman Mike Duncan has also signed on.

Unlike the RNC, however, the new group, a 527 organization, can raise unlimited funds from corporations and individuals and spend it to influence elections, meaning that it could serve as a more powerful campaign engine than the beleaguered national committee, which, according to a new Federal Election Commission report, has about $9.4 million in cash on hand.

Steele, who took over the RNC from Duncan, has found himself increasingly under fire after last week’s dust-up over the $2,000 spent at the Voyeur nightclub -- as well as lavish spending on plane flights and hotels. The disclosures resulted in the firing of a lower-level staffer last week and raised further doubts about Steele’s future.

Steele released a statement Monday that did not explain McKay’s departure, although it seemed to obliquely address the Voyeur spending controversy.

“I want to do everything in my power to ensure that the committee uses all its resources in the best possible fashion and for this reason I have appointed Mike Leavitt chief of staff,” the statement said.

Leavitt previously was deputy chief of staff.

The Voyeur flap came on the heels of a series of missteps during the year, including Steele suggesting that his party could not retake control of the House of Representatives and his decision to hold a retreat in Hawaii during a recession.

Steele defended his tenure Monday in a TV interview and said he would not resign his post.

He said that African Americans, such as President Obama and himself, are being held to a higher standard for success.

“Barack Obama has a slimmer margin,” Steele said on ABC’s “Good Morning America,” comparing himself to the president. “That’s just the reality of it.”

White House spokesman Robert Gibbs addressed Steele’s remarks Monday, saying, “I think Michael Steele’s problem is not the race card, it’s the credit card.”

Obama, in his political career, has steadfastly avoided linking his race to voters’ expectations of him.

Steele also pushed back at a poll of Republican insiders conducted by National Journal magazine in which more than 70% of respondents said they viewed him as a liability. He did, however, acknowledge that his organization had been fiscally reckless.

“The bottom line is, I hear my donors. I hear our base out there. I hear the leadership,” Steele said.

Steele, perhaps inadvertently, put his finger on the growing concern within the party that wealthy donors are bypassing the RNC in favor of other outlets.

He said that he favored courting the “grass roots” and not the “old-boy network” and that the committee was “scaling back” large events for wealthy donors.

The group being launched by Rove, Gillespie and others is looking very much toward tapping that old-boy network, one that drove the party’s electoral successes during the Bush administration.

The principals on Monday stressed that their effort was a means to complement and not subvert the RNC.

Individual donors can contribute to both. “We need the RNC to be a successful entity for Republicans to be successful,” said Jim Dyke, a member of the new group’s board of directors.

But some people close to the organization said the new group was intended in part to reassure Republican donors that their money would be used to elect candidates, not for perks.

Republicans traditionally have avoided setting up these tax-exempt political fundraising groups for fear of yielding control of their candidates’ campaign messages to outside organizations.

But Dyke said that recently, party leaders had become convinced that such groups were necessary to compete with Democratic fundraising.

“There’s been a need for this for awhile,” Dyke said. “It’s been in the planning stages for awhile.”

American Crossroads will be directed on a day-by-day basis by Steven Law, who is leaving the U.S. Chamber of Commerce as general counsel to run the organization -- another sign that the fund intends to be a major political player for the upcoming election cycle and on into the 2012 presidential campaign.

--

joliphant@latimes.com