Published February 01, 2011
| Associated Press
WASHINGTON -- Newly elected Republican National Committee Chairman Reince Priebus took the job with $23 million in debt and cut a third of the staff he inherited from his predecessor, the controversial and gaffe-prone Michael Steele.
In year-end federal finance reports on Monday, the GOP central committee showed that $2 million of its debt came during Steele's final two weeks as he sought to keep hold of his chairmanship. The Democratic National Committee, meanwhile, reported a continued fraction of that debt but had enough cash in the bank to pay off the loans immediately.
"While the year-end FEC report reveals the Republican National Committee is $21 million in debt, I believe it is best to get out all the facts as we know them associated with our financial position," Priebus said. "To date, the committee has approximately $23 million in debt: $15 million in loans and $8 million owed to vendors."
Priebus, a former Steele ally who unseated him, campaigned for the chairmanship promising to get the RNC's finances in order heading into the 2012 presidential elections. With Republicans hoping to limit President Barack Obama to a single term, committee staffers are overhauling the operation that is expected to have millions in donor dollars and a national campaign-in-waiting ready to hand the eventual nominee, as well as help other Republicans running for office.
"I am excited about these first steps, but recognize we have a long way to go to build the world-class political organization necessary to defeat President Obama. I will accept nothing less," said Priebus, a former Wisconsin GOP chairman.
An out-of-money committee could leave Republicans out of power.
The RNC brought in almost $105 million last year -- including the loans -- mainly through low-dollar donors and direct-mail solicitations. But Priebus said the costs were too high: 64 cents of every dollar raised went to fundraising.
"We have our work cut out for us, but I am confident we will succeed in turning around the RNC through hard work, transparency and honesty with our hardworking grassroots activists and donors," Priebus said.
During Steele's tenure, major donors complained that they were not courted and fumed about Steele and his string of gaffes. Instead of raising money fulltime, he went on the road on a 48-state bus tour to meet with activists. He wrote a book without telling RNC members, frequently made unwanted headlines and left many members of the central committee counting down until they could elect a new chairman.
Under Steele, fundraising from major donors hit a 10-year low. Instead, those donors gave to outside groups -- such as those led by political operatives Karl Rove and Ed Gillespie -- and the Republican Governors Association, led by Mississippi Gov. Haley Barbour. The GOP managed to make major inroads across the country but left many frustrated with the RNC and its lack of a get-out-the-vote operation.
To reduce spending, Priebus and his transition team cut RNC staff from 124 positions to 82, saving about $500,000 each month in staff and operating expenses. He also froze major contracts until they can be reviewed.
There is also the urgency of a $5 million loan payment due in February. The first installment of the RNC's debt is due in the coming days, but the RNC's budget committee voted -- before Priebus took power -- to push back the payment by a year.
Priebus has argued to RNC members that the option is unacceptable and his advisers are renegotiating to pay that loan off as soon as possible, according to a Republican who is familiar with the negotiations. The Republican spoke on the condition of anonymity to discuss financial negotiations.
The Democratic National Committee also took out a $15 million loan for the last campaign cycle but has paid off a large chunk of that. The DNC has more than $6 million in the bank and $1 million in debt, according to the committee's filing posted late Monday.
In a chairman-to-chairman contest, DNC Chairman Tim Kaine won the fundraising potency contest, in large part because his Democratic Party controlled the House, the Senate and the White House -- a fundraising bully pulpit that benefits those in power. Kaine raised almost $123 million to Steele's $90 million in cash.