Some big GOP donors say Michael Steele's spending habits are too lavish for a time when he should be stockpiling cash for midterms. Steele's spending spree angers donors

Republican National Chairman Michael Steele is spending twice as much as his recent predecessors on private planes and paying more for limousines, catering and flowers – expenses that are infuriating the party's major donors who say Republicans need every penny they can get for the fight to win back Congress.

Most recently, donors grumbled when Steele hired renowned chef Wolfgang Puck's local crew to cater the RNC's Christmas party inside the trendy Newseum on Pennsylvania Avenue, and then moved its annual winter meeting from Washington to Hawaii.


For some major GOP donors, both decisions were symbolic of the kind of wasteful spending habits they claim has become endemic to his tenure at the RNC. When Ken Mehlman served as the committee chairman during the critical 2006 midterm elections, the holiday party was held in a headquarters conference room and Chic-fil-A was the caterer.

A POLITICO analysis of expenses found that compared with 2005, the last comparable year preceding a midterm election, the committee’s payments for charter flights doubled; the number of sedan contractors tripled, and meal expenses jumped from $306,000 to $599,000.

“Michael Steele is an imperial chairman,” said one longtime Republican fundraiser. “He flies in private aircraft. He drives in private cars. He has private consultants that are paid ridiculous retainers. He fancies himself a presidential candidate and wants all of the trappings and gets them by using other people’s money.”

Louis M. Pope, who chairs the RNC’s Budget Committee, defends Steele’s expenses, arguing that a bump in costs is unavoidable for a party that lacks control of any of the levers of government. “Michael Steele does travel more, but he’s in far more demand. He’s a huge part of the fundraising apparatus,” said Pope. “Nobody is living it up at the RNC. There are a number of upscale events, but those are all profitable.”

But disclosure reports document the exodus of prominent donors who have decided to shift their giving to other party committees. In 2005, the RNC raised $46 million from donors who gave more than $250 and $55 million from small donors. In 2009, Steele’s RNC brought in just $24 million — nearly half as much — from big donors and $58 million from small donors.

When Steele took over the chairmanship last winter, he inherited a $23 million surplus. Since then, the former Maryland lieutenant governor has raised $10 million less than the party collected in 2005 and has spent $10 million more. By the end of 2009, the committee’s surplus had shrunk to $8.4 million, according to campaign finance reports.

Just last week, RNC officials touted a January fundraising haul of more than $10 million. But after hosting the sun-filled winter meeting in Hawaii, paying for the holiday party and taking care of other bills, the committee spent almost all of it. Consequently, the RNC added only $1 million to the committee’s $8.4 million in cash, the reports show.

Pope acknowledged the falloff but said some of it was caused by frustration and exhaustion after the 2008 election and that things are turning around. “Major donor events were up in the latter part of the year, once the party learned to raise money better without a president,” and Obama’s agenda rallied the base, he said.

The RNC’s fundraising problems could have real consequences in the fall, since the RNC typically acts as a bank in midterms, swooping in to help cash-strapped candidates. It also is responsible for running the party’s vaunted 72-hour get-out-the-vote program.

With House Republicans expanding their list of Democratic targets, a flush RNC could be vital to success. That is particularly so because the National Republican Congressional Committee has struggled to raise money on its own.

At the start of the year, House Republicans had just a little more than $2 million in the bank. At the end of January, the committee doubled its cash on hand to about $4 million, according to the latest reports, but party leaders have said they need more than $50 million to compete in the now-growing list of targeted contests.

“It will be terrible if we miss an opportunity because we don’t have enough money,” said a disgruntled GOP fundraiser.

And if that happens, there’s no doubt where contributors will lay the blame. POLITICO’s review sheds light on some of the expenses that have donors seething.

Four years ago, the national committee spent $1.5 million on airfare, including $81,000 with Moby Dick Airways, a private charter firm. Those costs were somewhat inflated because of campaign finance rules. A large chunk of the airfare — about $300,000 — covered the travel of Bush administration officials, who by law had to be charged higher fares.

Last year, the RNC spent $1.8 million on airfare, which included just a handful of pre-Inauguration trips by Bush officials. Meanwhile, the roster of private charter firms working for the RNC grew from one to seven. Among them were Moby Dick, a favorite of Republican presidential candidates, which received $79,000; Altour Air, which is based in Los Angeles and received nearly $51,000; and NewJets, which got more than $27,000.

In all, the RNC’s air charter bills amounted to more than $200,000 — more than double the amount in the 2005 budget.

The RNC’s use of private car services followed a similar pattern.

In both 2005 and 2009, the committee contracted with Carey International car services. But the number of private limousine and sedan firms being used by the committee tripled in 2009. Overall, the RNC’s car service bill was $245,000 in 2005 and $281,000 in 2009.

In addition to traveling in better style, RNC officials spent more once they arrived at their destinations.

The 2005 committee spent $1.35 million on lodging, compared with $1.5 million last year. The locations also improved. There were overnights at Ritz-Carlton hotels in Chicago, Denver, Marina del Rey, Westchester and Boston. The committee dropped $8,000 for two stays at Hotel Vitale, which boasts panoramic views of the San Francisco Bay.

RNC meal costs are among the categories that saw the biggest increases under Steele’s leadership. In Beverly Hills, Calif., the RNC spent $10,600 on food and lodging for a fundraiser featuring former Speaker Newt Gingrich at Spago, the flagship restaurant of the Wolfgang Puck Fine Dining Group. In total, the Wolfgang Puck enterprise has collected more than $94,000 from the RNC for catering services, compared with zero dollars in 2005.

“It’s symbolic of the way they are looking at the building and the way they are spending money,” said one donor. “It’s a culture. During the Bush administration, Karl Rove would bitch if there were flowers on the tables.”

Under Steele, the floral budget has expanded, as have a host of other perks. Unlike in 2005, the RNC’s fundraising costs included $8,210 for suites and tickets to Washington Nationals baseball games, $5,000 for Redskins tickets and $4,224 for tour guides and equipment during a meeting in Jackson Hole, Wyo., that also featured live entertainment.

Steele’s defenders say the increased travel and event costs are necessary to raise money and build grass-roots support. The 2005 committee, they note, had a distinct advantage: the draw of a presidential appearance.

Without such a big personality, said Pope, the committee has to put on better events to get donors to attend. “Yes, you do put on lavish events, where people are having nice meals by nice caterers, but it’s still cheaper than direct mail,” he said.

Randy Pullen, the RNC’s treasurer, noted that some of the charter jets were used to transport guests to fundraisers, not just to ferry the chairman.

He also said — and the numbers bear him out — that Steele has invested millions to improve the party’s online and direct-mail fundraising capabilities. According to Doug Heye, the RNC’s spokesman, that program has attracted 322,000 new donors this year.

The gubernatorial elections in Virginia and New Jersey and the Massachusetts Senate special election — all of which were won by Republicans — also drained the coffers. “We spent $13 million between Virginia and New Jersey,” said Pullen, “and we’re still paying for them.”

Henry Barbour, an RNC board member, said the investments in the off-year elections were worth it, since they “set the table” for the midterms. Still, he added, “clearly, we have our work cut out for us to fully capitalize on the political environment.”

But others said Steele simply isn’t willing to make the calls and stroke the egos of major donors, who can refill campaign accounts in record time. “We’ve written off the RNC. We’re playing elsewhere,” said one.

Indeed, not all Republicans are bemoaning the tensions. The Republican Governors Association announced Monday that it’s setting fundraising records — in part because the elite donors shunning the RNC are flocking to it.

The National Republican Senatorial Committee, which has been a perennial fundraising laggard, is also seeing its coffers swell because of the RNC rifts. For the first time since 1998, the NRSC posted more cash in the bank, $10.6 million, than the RNC, which has $9.4 million.

“I would say the NRSC starting the year with more cash is extraordinary,” said Anthony Corrado, an expert on campaign finance.