Supreme Court to hear challenge from Sen. Ted Cruz that may undermine campaign finance law

·6 min read

WASHINGTON – Sen. Ted Cruz didn't need the money. He wanted to make a point.

A day before his successful reelection in 2018, the Texas Republican loaned his own campaign $260,000. When the deadline came to repay the money, his campaign didn't fully reimburse him, so Cruz could challenge a law that has bitterly divided Republicans and Democrats over how candidates fund their campaigns.

The Supreme Court will hear arguments in that challenge Wednesday.

On the surface, Cruz is asking the high court to strike down an obscure provision of law that dictates what happens when candidates loan money to their own campaigns. Simmering below that is a bigger fight over what the Biden administration views as an anti-corruption effort and what critics see as a perk for incumbents.

Caught in the crossfire is a landmark, if controversial law signed by President George W. Bush in 2002 that set new limits on political donations, tried to quash "soft money" that skirted those limits and required federal candidates to include the now ubiquitous "I approve this message" tag line when they run ads on TV.

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Conservatives on the Supreme Court have repeatedly chipped away at that law, the Bipartisan Campaign Reform Act. Cruz asserts the First Amendment demands the court strike down another chunk.

"What it is is an effort to point out the inconsistencies and the absurdities, not just in this part of the BCRA but in many parts," said Erik Jaffe, a prominent lawyer and critic of the law who filed a brief supporting Cruz.

At issue are federal requirements governing how campaigns repay loans from a candidate in excess of $250,000. Any amount over that threshold has to be repaid within 20 days after the election or it converts to a donation, meaning the candidate can't recover it. A campaign is prohibited from repaying any amount above $250,000 from post-election contributions. If campaigns can't repay that money with contributions made before the election, the candidate has to take the loss.

Sen. Ted Cruz, R-Texas, objects to a campaign finance law.
Sen. Ted Cruz, R-Texas, objects to a campaign finance law.

The idea behind the prohibition is simple: Without it, contributions to a successful candidate's campaign would essentially wind up directly in the politician's pocket, since the money would be used by the campaign to pay back the candidate. That, supporters of the law say, increases the risk of corruption.

"Common sense suggests, for example, that the risk of corruption is greater when an officeholder receives $2,900 that he can use to pay down his mortgage than when he receives $2,900 that his campaign can use to pay for more placards," the Federal Election Commission told the Supreme Court in a brief filed last summer.

Cruz, who was made whole for $250,000 of his loan, acknowledged his campaign purposefully did not pay back the remaining $10,000, so he could challenge the law. After his race against Democrat Beto O'Rourke in 2018, Cruz's campaign had roughly $2.4 million in the bank.

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Opponents say repaying a candidate loan is no different than settling bills with ad makers, pollsters and staff. And, they say, the prohibition makes it harder for a challenger to compete against better-funded incumbents.

"This makes it harder for challengers of modest means to get sufficient name recognition early in the process without having to stake their savings ... on the outcome," Jaffe said.

Advocates on the other side worry about a sweeping decision from the Supreme Court that could hamper the FEC's ability to regulate other money-in-politics provisions. Senate Minority Leader Mitch McConnell, R-Ky., asked the court for exactly that outcome.

McConnell pointed out in a brief that the loan provisions of the BCRA were bundled into what became known as the "millionaire's amendment" when the bill was working its way through Congress. The amendment was intended to curb the ability of wealthy candidates to buy their way into office by restricting loans and allowing candidates running against self-funders to collect contributions in addition to the normal limits.

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The amendment was essential to the bill's passage in 2001, McConnell said.

Three years later, it helped a little-known Democratic state senator and law professor running for U.S. Senate, Barack Obama. As Obama ran for the Democratic presidential nomination in 2008, a narrow majority of the Supreme Court struck down the provision of the amendment that dealt with donor limits.

If the court invalidates the loan provisions, McConnell said, the justices may as well scrap the Bipartisan Campaign Reform Act altogether.

"From the beginning," McConnell told the court, the law "was a constitutional train wreck." The Supreme Court's decisions over the past two decades, he wrote, have turned the act into "the Humpty Dumpty of campaign-finance law."

The Supreme Court will consider the Bipartisan Campaign Reform Act.
The Supreme Court will consider the Bipartisan Campaign Reform Act.

Experts don't expect the court will go that far.

Still, there's always a possibility a decision leads to unforeseen consequences.

"Whenever a campaign finance case goes to the Supreme Court, particularly the court as currently constituted, it gives them an opportunity to create broader principles that might affect other campaign finance cases," said Tara Malloy, a senior director at the Campaign Legal Center. She said the court could whittle away at the FEC's ability to head off corruption.

"It's sort of a death by a thousand cuts," she said. "If the government has to somehow show 100 cases of bribery by loan repayments [to enforce the BCRA's provisions], that's going to be a bar that the government can never clear."

A return to court

The Supreme Court has issued landmark decisions that roll back federal campaign finance rules, including a ruling in 2010 that permitted outside groups to spend unlimited money in elections. Another decision four years later lifted caps on how much individuals may give to all candidates and committees during an election cycle.

Cruz's case, which arrives at the Supreme Court in a midterm election year, is on appeal from a special three-judge panel that unanimously sided with his position last summer. The panel, which included one judge nominated by a Democratic president and two nominated by a Republican, ruled the government failed to demonstrate that the prohibitions prevented quid pro quo corruption.

Before he was a senator, Cruz was a frequent presence at the Supreme Court, arguing cases both in private practice and as Texas' solicitor general. He successfully defended the state's 2003 redistricting plan, for instance. In 2004, he beat back an effort to reopen the murder convictions of dozens of Mexican nationals.

Cruz, who did not respond to a request for comment, told the court in legal papers last month that the loan provision "intrudes deeply on the rights of candidates and their campaign committees to make constitutionally protected decisions."

During the "heat of a campaign," he said, candidates must calculate whether they will be able to comply with the loan requirements even if they lose the election, or whether they'll wind up losing their money.

The law, Cruz said, "intensifies and distorts these inherent risks, deliberately curbing the funding, and thus the speech, of candidates, their campaigns, and their contributors."

This article originally appeared on USA TODAY: Supreme Court to hear campaign finance challenge from Sen. Ted Cruz