Republican Steele addresses spending flap

NEW ORLEANS (Reuters) - Embattled Republican Party Chairman Michael Steele admitted making mistakes on Saturday and tried to put a spending flap behind him at a party gathering where Mitt Romney won a popularity contest looking ahead to the 2012 presidential election.

Steele, speaking at the Southern Republican Leadership Conference in a hotel ballroom that was half full, gave no sign he would step down in response to scattered calls for his resignation. His low-key speech received polite applause.

Steele has been under fire over how party funds have been spent after a party organizer billed the Republican National Committee's for $2,000 spent at a sex-themed Los Angeles nightclub.

"Now I'll be the first to admit I've made mistakes and it's been incumbent on me to take responsibility, shoulder the burden, make necessary changes, and move," Steele said. "We've all had to do that from time to time."

Romney, a former Massachusetts governor who sought the Republican presidential nomination in 2008, narrowly won a straw poll of party activists gathered for the four-day pep rally, defeating Texas Representative Ron Paul by 439 votes to 438.

Former Alaska Governor Sarah Palin, who electrified the crowd on Friday, was third with 330 votes to 321 for former House Speaker Newt Gingrich. Ballots were cast by 1,806 of the estimated 3,500 activists at the conference.

Romney chose not to attend the conference, proceeding with a book tour.

The straw poll has uneven success in predicting the eventual nominee. In 2006, then-Senate Majority Leader Bill Frist won but his campaign never got started while in 1998, George W. Bush won and he went on to the presidency.

The Steele spending controversy has infuriated some influential Republicans who have long complained that Steele has been too focused on building up his image on television rather than doing the hard, behind-the-scenes work of raising money and recruiting candidates.

While Republicans have complained about him, there has been every indication that Steele will survive in his post through the November congressional elections. State party chairmen in 31 states issued a letter supporting him on Friday.

"Folks have been mad at us in the past and we have learned from that past and we are ready to move on to a bright future, as leaders, as Republicans, as conservatives," Steele said.

Republicans are energized in opposition to Obama's agenda and harbor hopes of wresting the U.S. House of Representatives and maybe even the Senate from Democratic control in November.

DON'T LOOK TOO FAR AHEAD

Other speakers urged party loyalists to concentrate on winning seats in November and worry later about who to pick to challenge President Barack Obama in 2012.

"Don't get distracted by 2012," Mississippi Governor Haley Barbour said. "The election we've got to be focused on is 2010. We can't wait until 2012 to start taking our country back."

The party in power typically loses seats in Congress in the first election after a new president takes power but estimates vary on how many they can pick up this year. Control of the House could be hanging in the balance.

"We have to stay focused," said Representative Mike Pence, a ranking House Republican. "We've got to resist the temptation to look past the next election."

Many activists at the conference aligned themselves with the Tea Party conservative grass-roots movement.

Tea Partiers, who generally favor constitutionally limited government, free-market ideology and low taxes, are posing a challenge for Republican Party leaders because some adherents believe the party has strayed from conservative principles such as controlling government spending.

Speakers at the conference have gone out of their way to make clear they want support from the Tea Party followers lest they form another political party, a potential disaster for Republicans.

"How do we win in 2010?" Barbour asked. "We stick together."

(Editing by Bill Trott)