Campaign

Worst RNC cash flow in a decade

by Aaron Blake - 01/06/10 11:00 AM ET

A 2009 spending spree has left the Republican National Committee (RNC) with its worst election-year cash flow this decade.

The largest GOP party committee has $8.7 million in the bank heading into an election year with 37 governors’ races, a dozen major Senate contests, dozens more in the House and an all-important redistricting cycle on the horizon.

{mosads}Said one RNC official: “It is very troubling, and the thing is, most people don’t understand this. But it is really troubling.”

The RNC had $22.8 million in cash and no debt when Michael Steele was elected chairman at the end of January, but has since seen its cash on hand drop to less than $9 million at the end of November.

Over the previous five months, while governors’ battles were being waged in New Jersey and Virginia, the committee saw its cash reserves drop by a full $15 million. Through November, the committee spent more than $90 million last year, which is nearly $20 million more than the Democratic National Committee (DNC).

“They’re spending money at 2002 levels when they are not raising money at those levels,” said a GOP operative. “That kind of thing worked when RNC was awash in money, but you can’t do that in this environment.”

Off-years like 2009 are generally a time for committees to get their financial house in order. They work to retire any debt left from the last election cycle and then build a war chest in preparation for the even-year election.

The RNC, though, made huge investments in New Jersey and Virginia, betting on the momentum created by those gubernatorial races to spur more giving.

Both were big GOP wins, but the question for many in the party is whether they were worth such a dent in the party’s coffers. And even subtracting the $13 million spent in those races — $9 million in Virginia and $4 million in New Jersey — the committee has just about broken even since Steele took over.

The Democratic National Committee (DNC) lost both races, but saw its cash on hand climb to a debt-free $13 million. That’s not a whole lot better than the RNC, but the DNC began the year in much worse fiscal shape, with $5.6 million in cash and $5 million in debt.

RNC spokeswoman Gail Gitcho noted that Republicans had taken just one governorship or Senate seat from Democrats in the last four years before the wins in New Jersey and Virginia.

“The fact that the RNC committed a large amount of resources and staff in 2009 did yield a significant dividend,” Gitcho said. “The goal of the RNC is to raise money and win elections. We had a strong fundraising performance last year, but have an even more aggressive approach for the 2010 midterms.”

After each of the last two midterm off-years, the RNC had more than $30 million in the bank.

In 2005, it raised $19 million more than it spent, and in 2001, it raised $10 million more than it spent.

{mosads}The situation is particularly troubling for the cash-strapped National Republican Congressional Committee (NRCC), which had just $4.3 million in cash and $2 million in debt at the end of November. The committee, which is targeting upwards of 40 Democratic districts, could use the national party’s help in a big way.

Critics of the Steele-run RNC say a freewheeling style and reliance on outside consultants has hurt the committee’s bottom line.

“It’s problematic, to be sure,” said conservative commentator Matt Lewis. “They should be riding high, but I think conservatives have decided it’s better to donate to groups like the Club for Growth — or to the candidates themselves.”

While the RNC continues to spend heavily on consultants and outside help — about half of the $90 million it spent between January and November — the DNC has moved much of its operation indoors.

The RNC has spent about twice as much as the DNC on consultants this cycle, according to a review of Federal Election Commission (FEC) data.

About $35 million of the $90 million spent by the RNC has gone to direct mail and telemarketing — its trademark methods of rounding up donors. The DNC has spent about $11 million on those two things, but has raised nearly as much as the RNC.

One former RNC member pointed out that the Republican Governors Association (RGA) ended the year with $25 million in the bank — suggesting more of the onus could have been on that organization.

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“He’s got a lot of money to raise,” the member said of Steele. “Does that mean you can’t get there? No. But major donors are going to have to kick in, and he’s going to need to get a lot of new donors by prospecting.”

Steele has endured a series of questions about the committee’s finances and his stewardship. The committee spent heavily on a new website, and Steele has drawn heat for renovating his office, awarding high salaries for close associates and accepting speaking fees.

Earlier this year, a group of RNC officials headed by Treasurer Randy Pullen presented Steele with a resolution asking for more checks and balances on his ability to award contracts and spend money.