Voting Rights and Democracy

Supreme Court sides with Sen. Ted Cruz in fight over federal campaign loan repayment limits

WASHINGTON – The Supreme Court on Monday sided with Texas Sen. Ted Cruz over a federal law that limits the ability of campaigns to repay loans made by candidates in a ruling that could have broader implications for the regulation of money in politics.

Chief Justice John Roberts, writing for a 6-3 majority, said a federal law restricting how the loans are paid back “burdens core political speech without proper justification.”

In what supporters called an anti-corruption rule but critics say benefited incumbents, Congress capped at $250,000 the amount campaigns may use from post-election funds to repay a loan made by the candidate out of concern that unrestricted repayment essentially amounted to putting donations into a politician’s pocket.

Cruz asserted that the limitations violated the First Amendment’s protection of free speech because in practice it curbed a candidate’s ability to spend money freely on their own campaign by limiting how a loan could be repaid.

The law wasn’t about fighting corruption, Cruz’s attorneys said, but rather about protecting incumbent lawmakers in Congress from wealthy challengers.

Cruz and others said repaying a candidate loan is no different from settling bills after an election with pollsters and campaign staff.

That argument resonated with the court’s six conservative justices, who wrote that the government was unable to “identify a single case of quid pro quo corruption in this context.” Campaign finance law already has a mechanism in place to limit the possibility of that corruption, the court wrote: limits on how much an individual donor may give.

Restricting the way the loans are paid back, the majority said, would make it less likely those loans are made in the first place.

“In order to jumpstart a fledgling campaign or finish strong in a tight race, candidates for federal office often loan money to their campaign committees,” Roberts wrote. “This limit on the use of post-election funds increases the risk that candidate loans over $250,000 will not be repaid in full, inhibiting candidates from making such loans in the first place.”

Cert granted:Supreme Court to hear challenge from Sen. Cruz on campaign law

Arguments:Supreme Court signals support for Sen. Cruz in campaign finance fight

While the cap itself has limited impact – no one can say how many candidates are affected by it – campaign finance advocates said they were concerned the high court’s decision could open a door to a further weakening of other campaign finance laws.

Associate Justice Elena Kagan, who wrote a dissent joined by the court’s two other liberal justices, said getting rid of the law opens up another loophole in the federal system of campaign finance.

“Political contributions that will line a candidate’s own pockets, given after his election to office, pose a special danger of corruption,” Kagan wrote. “The candidate has a more-than-usual interest in obtaining the money (to replenish his personal finances), and is now in a position to give something in return. The donors well understand his situation, and are eager to take advantage of it.”

The Supreme Court has issued landmark decisions that roll back other 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 was 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, said the government failed to demonstrate that the prohibitions prevented quid pro quo corruption.

The loan provision is part of a law signed by President George W. Bush in 2002 that set new limits on political donations, tried to eradicate “soft money” that skirted those limits, and required candidates to include the “I approve this message” tag line when they run ads on TV or radio. Senate Minority Leader Mitch McConnell of Kentucky asked the Supreme Court in a brief to use the Cruz case to invalidate the entire law.

Sean Cooksey, appointed to the Federal Election Commission by President Donald Trump, said the ruling will provide “much needed guidance to lower courts.” He encouraged his fellow commissioners to quickly repeal regulations tied to the law “in order to remove any doubt or confusion among the public and candidates.”

Miriam Becker-Cohen, an attorney with the liberal Constitutional Accountability Center, said that the decision makes a “hollow promise” out of “any remaining commitment of this court to upholding campaign finance regulation.”

The Justice Department declined to comment.

The decision “is a resounding victory for the First Amendment,” said Cruz spokesman Steve Guest. “This landmark decision will help invigorate our democratic process by making it easier for challengers to take on and defeat career politicians.”

Cruz, a 2016 presidential candidate, had to first clear an initial hurdle: whether he had standing to sue. Cruz acknowledged that he loaned his campaign $260,000 during the 2018 midterm election only so that he could test the law in federal court.

A day before his reelection in 2018, Cruz loaned the campaign $260,000. When the deadline came to repay the money, his campaign didn’t reimburse him for the last $10,000, which allowed him to challenge the law. During oral argument in January, conservative and liberal justices alike seemed to agree that Cruz had standing to bring the lawsuit in the first place. The Biden administration had argued Cruz suffered from self-inflicted harm and therefore wasn’t entitled to file his lawsuit.

The court tossed out those arguments Monday, asserting that they had an “Alice in Wonderland air about them.”

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