Heads roll: RNC chief of staff "resigns" over nightclub expenditure

So the chairman with the allegedly slim margin of error is still there but the underling with the wiiiiiide margin of error isn’t? Go figure.

RNC chief of staff Ken McKay has resigned from the national committee a week after improper expenditures came to light, a top GOP source tells Hotline OnCall…

McKay fired the staffer who made the expense. Still, RNC chair Michael Steele, who has faced a week of criticism for the incident, felt more had to be done.

“The chairman felt it was critical to make a move swiftly to ensure that no improper expenses happen in the future,” RNC spokesman Doug Heye told Hotline OnCall.

One of Steele’s allies calls McKay’s departure a huge loss for the party and claims he was “the guy who steered the party through very successful elections last fall.” Terrific. With major fundraisers like Sam Fox abandoning ship, I guess Steele felt he had to do something showy on the personnel front. The only problem? It’s probably too late. The GOP leadership’s been ignoring him for months and a new 527 group with big-time Republican connections is set to launch soon to pick up the RNC’s slack. Ladies and gents, meet American Crossroads:

Big time donors fretting about Republican National Committee Chairman Michael Steele’s troubles are helping fuel early fundraising success for a new 527 group being promoted by GOP uber strategists Ed Gillespie and Karl Rove

So far, the new soft-money group, American Crossroads, has received commitments of almost $30 million and is seeking to raise a total of some $60 million to help dozens of Senate and House incumbents and challengers this fall, say three sources familiar with the new 527. In contrast, at the start of January, the Republican National Committee had only $8.4 million in the bank compared with the $22.8 million it had on had a year earlier when Steele was elected chairman.

Steven J. Law, the general counsel at the U.S. Chamber of Commerce and one time executive director of the National Republican Senatorial Committee, is expected late next week to take over as president and chief executive officer of the 527. American Crossroads is now assembling a board of directors that’s likely to include some big donors and a few GOP luminaries.

Ben Smith calls it a “shadow RNC,” and no wonder. Gillespie’s not the only former RNC chair involved: Mike Duncan will also reportedly be one of the directors. It sounds like it’s been in the works for awhile, inspired not by Steele’s struggles but by what Democratic groups like America Coming Together were able to accomplish two years ago. The idea was to get it up and running to help win some swing midterm races and then have it be positioned to be a major player in the presidential race in 2012, but thanks to the RNC clusterfark, they’ve now got a plum opportunity to become the go-to site for big Republican donors. I wonder whether they’ll end up attracting small donors too — Rove’s visibility will certainly help — or whether grassroots righties will end up donating mainly to individual candidates or PACs. Watch to see if they add any rightroots heroes to the board of directors in the next month or two to try to lure small money.

Exit question: Hey, remember when Steele thought playing the race card was lame?

Update: Gillespie has kind words for McKay’s replacement.

“Mike is a very smart political operative and effective manager of people and resources,” ex-RNC chair Ed Gillespie said in an e-mail. “He knows the chairman well and how best to maximize his strengths. He also has very good relations with the other committees and Republican strategists. Chairman Steele’s decision to put Mike Leavitt in charge of the building will be reassuring to a lot of Republicans.”

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