RNC's Nasty Talk: Mailer Directs Donors to Sex Line

In the line of fire, Steele is moving fast to put the controversy behind him. He has fired Allison Meyers, the staffer who took a group of donors to Voyeur last January, and Steele maintains that he knew nothing of the outing.

The RNC said it would be reimbursed for the $1,946.25 bill that was racked up at the strip joint, which is modeled on the 1999 movie "Eyes Wide Shut" and features women acting out voyeuristic scenes in live art installations.

Insiders worry that the controversy is distracting from the Republican Party's primary goal, seizing majority control of Congress in November's mid-term elections.

"This is a really a bad distraction at a time when we have the Obama administration on the ropes and we are making great gains," said Ken Blackwell, vice chairman of the RNC's platform committee and former candidate for chairman. "Among the rank and file, we now have attention diverted to this fiscal irregularity and this controversy.

"At the end of the day, Chairman Steele knows that the buck stops at his desk, and so that's why it is incumbent upon him to take quick action to right the ship, to make sure that appropriate heads roll, to build confidence among our donor base," Blackwell said.

Some people say the party's lavish spending is excessive at a time when funding is hard to come by.

"People are giving their hard-earned money to a party to help elect candidates, that's the goal, not to chauffeur the chairman of the party around in limousines," Neil Patel, publisher of the Daily Caller, said.

The Republican Party insists that it needs to spend money to raise more cash. The RNC is not alone in its spending spree. The Democratic National Committee spent $45,000 on two hotels alone in February.

The RNC has about $10 million on hand right now, about the same as it had a year ago, despite raising $96 million last year.

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