Michael Steele, Call Me Irresponsible

According to public documents obtained by Americans for Limited Government (ALG), Michael Steele, Chairman of the Republican National Committee (RNC), is as fiscally irresponsible in his personal life as he has been in the management of the RNC.  A rough estimate indicates that Steele is obligated to pay 117% of his take-home pay in mortgages and taxes on his $1.7 million home in Upper Marlboro, Maryland.

This is no ordinary home, but is a 6,440 square foot mansion with 6.5 bathrooms set on an almost four-acre lot.

On January 23, 2008 when Steele purchased the property, there was a mortgage recorded in the amount of $1,909,000.  This was later converted to another mortgage on November 5, 2008.  There is a first mortgage of $1,537,500 at 6.75% (5/1 ARM) and a second mortgage of $195,000 as of that date.  This comes to a total of $1,732,500.

The monthly payment on the first mortgage is $9,972.20.  The payment on the second would be around $1,200 for a total of around $11,236.20.

Chairman Steele's residence

The current property tax assessment for this home is $17,468.76 per year, which comes to $1,455.73 a month. Adding the mortgage payments and tax payments suggests that the monthly liability for the house comes to around $12,691.93  (not to mention homeowner’s insurance and utilities.)  So how much money would you need to make to pay for an estate of this magnitude?  The short answer is a lot.  The general rule for mortgage qualification is that your house payment plus property tax and insurance shouldn’t exceed 28% of your gross income. Using the 28% figure, a person would need a gross annual income of approximately $544,000 to qualify for this type of loan ($544,000* .28 /12 = $12,693.33)

As of 2009, Steele’s salary at the RNC was $223,500 a year.

His listed salary disbursements in the last three months of RNC reports to the FEC are as follows:

Steele’s Take-Home Pay

6/30/2010    $5,634.55

6/15/2010    $5,414.48

5/28/2010    $5,380.16

5/14/2010    $5,414.48

4/30/2010    $5,380.17

4/15/2010    $5,414.48

This is an average of $10,879.44 a month.  So how does Steele, who only takes home $10,879. 48 a month, make a monthly house payment of at least $12,691.93?  Clearly he can’t afford the mortgage on this house with his normal RNC salary.

Late last year, reports surfaced that Chairman Steele had engaged in the unusual practice of making paid speeches and asking between $8,000 and $20,000 plus first-class travel and accommodations to do so.  Steele was criticized at the time for “taking time out to speak for the benefit of one’s own bank account,” a practice called “not appropriate.” Given the massive personal debt that Chairman Steele has racked up his practice makes perfect sense.  His lack of personal fiscal restraint has made it impossible for him to be a full time Chairman because his house payment alone consumes all of his take-home pay from the RNC.