After their sweeping defeat in the 2008 election it looked as though the Republican Party was in serious trouble. They had not only lost the presidency, but also radically outnumbered in both Houses of Congress. In New England, the birthplace of the Republican Party, they didn't have a single House representative. Things looked very dim.
Even though they were still a party made up 99% of white people, they decided they needed a "token" to make it look like they could appeal to people of all colors and races. They chose Michael Steele to be that token and made him the chairman of the Republican Party. They thought this would destroy that image of being only the party of whites (while whites would maintain control of the party behind the scenes).
That didn't work out too well for them. Steele was a weak leader and looked much of the time like a buffoon or a puppet. In addition, he mismanaged party funds and proved inept as raising new money for the party. For the first time in many years, the Democrats raised and spent more money (in 2010) than did the Republicans. The only thing that saved the Republicans in 2010 was voter anger at Democratic failure to control the recession, and huge amounts of money being spent by right-wing organizations and corporate groups.
But if you will notice, these right-wing groups did not give the money to the Republicans to spend. They spent it themselves rather than put it into the hands of Michael Steele -- very probably because they had no faith that Steele would spend it wisely, since he was chosen to be a token and not a leader.
And they were probably right to do that. Going into the next presidential cycle, the Republican Party is worse off financially than they have been in a long time. One of Steele's aides just resigned his position and let the cat out of the bag. The Republican Party has a $15 million line of credit, and it is currently maxed out. They go into this next election cycle $15 million in debt.
In comparison, the Republicans have entered the last two presidential cycles with positive cash balances -- $4.8 million in 2002 and $3.1 million in 2006. In addition, the Republicans found in the last couple of years that electing a token as party head didn't work nearly as well for them as tapping into the racism and resentment of their base toward having a black president.
What all this means is that Steele's days as RNC chairman will end soon. He already has opponents and some RNC members are actively campaigning against him. The Republican leadership in Congress would also like to see him replaced. Steele is as good as gone.
Steele is making noises like he wants to run for re-election, but the Republicans have already decided they don't need their token anymore. They were never comfortable with a black man in their leadership anyway, and the financial bungling gives them all the excuse they need to dump him.
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