WASHINGTON — Conservatives have bristled for decades at campaign spending caps. On Wednesday morning, the Supreme Court took up Sen. Ted Cruz’s effort to overturn a $250,000 limit on how much a candidate can recoup from post-election donations to repay personal loans.
The cap is meant to avert corruption, but Cruz contends that if donors can pay off a candidate’s loan to his own campaign before Election Day, they should be able to do so after they win, too.
It’s a fight the Texas Republican spent $10,000 to pick, out of his own pocket.
Government watchdogs view with alarm the latest effort to erode anti-corruption provisions in a bipartisan 2002 campaign finance law. The Justice Department, which is defending the law, warns that allowing donors to pour money into a politician’s pockets after Election Day invites corruption.
Cruz and his allies call the restriction onerous and note that donors can’t cut checks bigger than $2,900 per election anyway — a limit that itself averts corruption, whether those checks come before or after Election Day.
“Congress effectively gives a corruption hall pass to the first 86 donors who max out after an election, but abruptly closes the corruption window on donor number 87,” argued Cruz’s lawyer, Charles Cooper, during 90 minutes of oral argument.
On the last day of the 2018 race with Democrat Beto O’Rourke before voters returned him to the Senate, Cruz loaned his campaign $260,000. The campaign didn’t need the money. Cruz raised $46 million in what became the most expensive Senate race in history, though after the 2020 cycle it’s not even in the top 10 anymore.
The first post-election FEC filing showed ample cash to repay the senator in full — $262,800 as of 20 days after Election Day. Over the next month, all but $10,000 of the debt was repaid, in four installments from $25,000 to $100,000.
In other words, the Justice Department argued, the only reason Cruz is out any money isn’t the campaign finance law — it’s that he chose to be.
Malcolm Stewart, the deputy U.S. solicitor general, likened Cruz to a McDonald’s customer who knows the coffee is too hot and pours it on herself anyway, in order to sue the fast food chain for negligence.
Justices across the ideological spectrum were dubious, noting that legal history is replete with plaintiffs who subjected themselves to a constitutional injury in order to challenge a law.
To them, Cruz forfeiting the $10,000 voluntarily in order to pick this fight is akin to a couple who tries to buy a house in order to prove discrimination, even if they never intend to go through with the deal.
As for whether the $2,900 donor cap is itself enough to avert corruption, Stewart insisted that a donation that goes straight to a candidates’ personal bottom line is a gift. “The limits on gifts to federal officials are much lower. We worry about corruption at a much lower level when the money is going into the candidate’s pocket,” he argued.
Cruz lawyer asserted that the loan repayment cap forces a candidate to think twice before lending money to his own campaign — deterring his exercise of free speech rights.
The provision at issue is part of the Bipartisan Campaign Reform Act of 2002, signed into law by President George W. Bush.
Senate Minority Leader Mitch McConnell, R-Ky., called it a “constitutional train wreck” from the outset, in a friend of the court filing.
McConnell challenged the law immediately. But in a 2003 ruling that bears his name, he lost at the Supreme Court. He boasts now that the high court has been dismantling the law ever since.
The biggest blow came in 2010, with the Citizens United ruling that opened the door to super PACs and unlimited corporate spending on campaign ads. The 5-4 court sided with a conservative group the FEC had blocked from promoting a film that accused Hillary Clinton of corruption.
The loan repayment cap is only the latest provision in the crosshairs.
“The limit chills core political speech, especially speech by unknown challengers who need to spend more to be heard. And the loan-repayment limit does not serve any legitimate government interest,” McConnell argued.
The government contends that at most, the loan repayment cap imposes a modest burden on political speech.
There’s also an important distinction between a candidate lending money to a campaign, or spending personal funds outright.
Watchdog groups don’t much like the idea of wealthy candidates buying a Senate seat. Nor do voters, and campaign history is filled with defeated candidates who dug deep into their fortunes.
The justices wrestled at length with the proposition that candidate loans actually pose a bigger risk of corruption, because donors know exactly who won the election and how to line the winner’s pockets.
“The candidate with $3,000 of debt is a lot less likely to start thinking about how he can sell his votes than the candidate with $500,000 of debt,” Justice Elena Kagan told Cruz’s attorney. So, she said, even though the first and 87th donor cutting a $2,900 check aren’t thinking about a quid pro quo, a candidate might well be.
“I don’t know why you contest that this is like a gift,” she told Cooper. “One day I had a $10,000 loan. The next day I don’t. Somebody just made me $10,000 richer.”
Cooper pushed back.
“A repayment of a loan is not a gift,” he insisted, adding later that donations are spent — whether to pay for rent or ads or to repay a loan from the candidate — should make no difference.
Other than the $2,900-per-person cap, “Congress hasn’t limited post-election contributions,” Cooper noted. “Congress does not see those post-election contributions as being payoffs.”
The case could turn on whether Cruz, in picking this fight, wasn’t careful enough in how and when he shifted funds.
Cruz’s campaign didn’t need the money on the day before Election Day, and it had ample funds to repay the debt. That, the Biden administration argued, means he didn’t make the loan to fund political speech, but entirely to lay the foundation for this lawsuit — and that means he couldn’t have suffered a free speech injury.
Plus, the Justice Department argued, he hasn’t even claimed— let alone proved — that he repaid the loan using funds raised after Election Day.
Rather, the Cruz campaign conceded early in the fight that “none of the $250,000 of the loan that was repaid was from contributions raised after the election.” Nor, the campaign committee said, did it bother to “undertake the meaningless task of attempting to trace which fungible dollars were used to repay Cruz’s loans.”
Given that, the government argued, the senator could even now collect another $10,000 from his campaign account without violating the law, and the FEC couldn’t possibly prove a violation.
Cruz disputes that.
As for the claim that Cruz lacks standing because he chose to forfeit the $10,000 by waiting more than 20 days, his lawyer pointed to Plessy v. Ferguson, a landmark case that challenged segregated trains in the South.
“At least since Mr. Plessy sat down in the train car reserved for whites” the Supreme Court has recognized that sometimes, the only way for a plaintiff to challenge a law is to violate it, Cooper said.
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