Image: Michael Steele
Chip Somodevilla  /  Getty Images
Michael Steele leads the RNC's State Chairman's meeting at the Gaylord National Hotel and Convention Center on May 11 in National Harbor, Md.
updated 5/11/2010 2:27:50 PM ET 2010-05-11T18:27:50

Republican National Committee chairman Michael Steele on Tuesday defended his organization's lavish spending as he sought to contain the damage from a donor event at a sex-themed nightclub and the use of private jets and limousines.

Steele, whose tenure as Republican leader has been marked by controversy, told state party leaders that the spending was necessary for him to do his job and it didn't affect GOP candidates. Steele's PowerPoint presentation at a closed meeting included photos of jets and limos followed by a line-by-line justification for the spending.

"After he explained it, we understood," said Saul Anuzis, a committeeman from Michigan. "Everything was justified."

The RNC chief of staff, chief consultant, finance director, deputy finance director and a liaison to young Republicans have all lost their jobs as donors grew frustrated with what they considered extravagant spending. A January outing — that Steele did not join — to the Voyeur nightclub in West Hollywood featured topless woman simulating lesbian bondage. The event proved to be a breaking point for a party out of power and without a unifying leader.

Steele acknowledged the problems in his report to his committee, participants said. He called spending an "ugly gorilla" and "the giant elephant in the room."

The RNC reimbursed an aide almost $2,000 for the nightclub event; officials later said the committee would recoup that cash. Still, the RNC had become a late-night joke and questions arose about Steele's tenure. An internal audit found significant deficiencies in RNC operations and said the Voyeur tab was approved with a forged signature.

Video: Steele: Jobs not 'created the way they should’ Steele's defenders said he was the party leader and had to explain the spending to the committee.

"We're his board of directors," Anuzis said.

Left ignored, incorrect perceptions would hurt the Republicans' reputation.

"The myth becomes reality," said Alaska Republican Party chairman Randy Ruedrich. "You can't ignore it."

Steele sought to focus on November contests when voters will elect 37 governors, 36 senators and the entire 435-member House. Donors have been nervous about Steele's spending and several have said they would be giving their campaign dollars to Republican groups that elect House, Senate and gubernatorial candidates instead of the central committee.

Steele told party chairs that the RNC has plans for state directors in more than two dozen states, with more than 100 Washington-funded officials in place in the states by June.

For the fundraising quarter that ended March 31, the RNC raised $29.6 million compared to $29.9 million for the Democratic National Committee. The RNC had almost $11.4 million in the bank and no debts; the DNC had $14.7 million in the bank and owed some $3.4 million to lenders at the end of March.

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