Ted Cruz Wins in Campaign Finance Case at Supreme Court
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Conservative Justices Side with Ted Cruz in Campaign Finance Case; Justice Kagan Slams Majority for Being ‘Allergic to All Campaign Finance Regulation’

 

Senator Ted Cruz (R-Texas)

The Supreme Court’s conservative majority ruled 6-3 in favor of Senator Ted Cruz (R-Texas) Monday, handing the two-term senator a big win on the issue of campaign finance.

The case, which is stylized as Federal Election Commission v. Ted Cruz for Senate, challenged federal anti-corruption laws that restrict how private loans can be repaid by political campaigns.

Cruz, knowing the law, essentially created the controversy underlying the litigation. He was running for re-election to the U.S. Senate and loaned $260,000 in personal funds to his election committee on the day before the 2018 general election. Section 304 of the Bipartisan Campaign Reform Act of 2002 (“BCRA”) put a $250,000 cap on repayment, meaning that anything above the cap may only be repaid with pre-election contributions and all payments must occur within 20 days post-election. Anything outside those parameters are then to be recharacterized a contribution, as opposed to a loan.

Given the regulations, Cruz’s $260,000 loan was separated into the two portions required by law: the first $250,000 was repaid to him, and the remaining $10,000 was recharacterized as a contribution. The separation was key to Cruz’s establishing actual financial harm suffered as a result of the BCRA. Cruz immediately challenged Section 304 in court, arguing that the loan-repayment limitation violated his First Amendment rights.

Chief Justice John Roberts penned the opinion for the Court’s six-member majority, which included Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett. Roberts adopted a posture of understanding of the plight of political candidates, explaining that candidates often loan money to their own election committees, “to jumpstart a fledgling campaign or finish strong in a tight race,” and noting that Cruz’s 2018 senatorial campaign was “the most expensive Senate race in history.”

Roberts began his analysis by addressing a major argument against Cruz: that whatever injury the senator suffered was entirely self-inflicted, and therefore, precluded his standing to sue. Cruz’s own role in creating the harm pleaded in his lawsuit was discussed at length during oral arguments. Deputy Solicitor General Malcolm Stewart argued on behalf of the Federal Election Commission (FEC) that Cruz’s making the $10,000 loan was akin to purchasing an ultra-hot coffee from McDonald’s solely for the purpose of creating a redressable injury about which to litigate. Justices Samuel Alito and Clarence Thomas, however, raised an analogy of their own: Cruz’s loan should be viewed no differently than a hypothetical decision by Homer Plessy (of the overturned separate-but-equal precedent) to sit in a segregated railway car; Plessy could still have challenged the law, and so can Cruz.

Ultimately, it was the Plessy-like take that won the day. Roberts wrote that Cruz’s role in making the loan did nothing to deprive him of standing to challenge the regulation.

“That appellees chose to subject themselves to those provisions does not change the fact that they are subject to them, and will face genuine legal penalties if they do not comply,” Roberts wrote.

Roberts went on to address another preliminary argument on standing put forth by the FEC—namely, that Cruz has no standing to challenge the regulation because he received enough post-election contributions to repay the loan in the manner permitted by the statute. Roberts called out the FEC’s arguments for having “an Alice in Wonderland air about them,” in which the government argued that Cruz would not violate the statute and Cruz argued that he would. Roberts wrote that the high court “need not go further down this rabbit hole,” and squarely held that Cruz had standing to challenge the statute at issue.

The chief justice next turned to the merits of Cruz’s challenge, and noted that the regulations in question limit political speech, which should be the most robust and open of all free speech. The burden on Cruz’s First Amendment expression in this context is “evident and inherent,” wrote Roberts, who then cast the idea of a self-funded campaign as the ultimate tool for political newcomers.

“The ability to lend money to a campaign is especially important for new candidates and challengers,” wrote Roberts, “As a practical matter, personal loans will sometimes be the only way for an unknown challenger with limited connections to front- load campaign spending.” Roberts continued, concluding that because “Section 304 raises a barrier to entry” it constitutes an abridgment of free speech rights.

As the court turned to its task of applying the requisite heightened scrutiny to the FEC regulation, it abruptly curtailed the analysis. The precise scrutiny level is not necessary for the court to decide, held Roberts, because “under either standard, the Government must prove at the outset that it is in fact pursuing a legitimate objective.”

“It has not done so here,” Roberts said.

Roberts was clear in explaining where the deficiency lied: “This Court has recognized only one permissible ground for restricting political speech: the prevention of ‘quid pro quo’ corruption or its appearance.” Whatever anticorruption purpose the federal government asserted would support the ruling left the majority unconvinced. Roberts dismissed the government’s intention as “yet another in a long line of ‘prophylaxis-upon-prophylaxis approach[es].'”

Roberts noted that the government’s so-called evidence of the risk of corruption amounted to little more than media reports, academic speculation, polls, and anecdotes. Even the statements of individual members of Congress were unconvincing to the conservative majority, which derided the proof as “pretty meager.”

Roberts also made short work of the government’s argument that the regulation is a “common sense” anti-corruption measure. The FEC argued that post-election contributions can be used not to finance a campaign, but to simply line the pockets of a candidate-elect. To that, Roberts wrote, “But this forgets that we are talking about repayment of a loan, not a gift.”

“If the candidate did not have the money to buy a car before he made a loan to his campaign, repayment of the loan would not change that in any way,” he added.

Justice Elena Kagan authored a 15-page dissent which was joined by Justices Stephen Breyer and Sonia Sotomayor. Kagan began by providing a simple story of how candidate personal loans like Cruz’s operate to create “government corruption”:

A candidate for public office extends a $500,000 loan to his campaign organization, hoping to recoup the amount from benefactors’ post-election contributions. Once elected, he devotes himself assiduously to recovering the money; his personal bank account, after all, now has a gaping half-million-dollar hole. The politician solicits donations from wealthy individuals and corporate lobbyists, making clear that the money they give will go straight from the campaign to him, as repayment for his loan. He is deeply grateful to those who help, as they know he will be—more grateful than for ordinary campaign contributions (which do not increase his personal wealth). And as they paid him, so he will pay them. In the coming months and years, they receive government benefits—maybe favorable legislation, maybe prized appointments, maybe lucrative contracts. The politician is happy; the donors are happy. The only loser is the public. It inevitably suffers from government corruption.

Kagan argued that Section 304 was enacted to combat the “enhance[d] the risk of dirty dealing” posed by post-election “campaign” contributions before. She then dished out some harsh words for the majority.

“In striking down the law today, the Court greenlights all the sordid bargains Congress thought right to stop,” Kagan warned. “The theory of the decision (unlike of the statute) is hard to fathom.”

“In allowing those payments to go forward unrestrained, today’s decision can only bring this country’s political system into further disrepute,” she added.

The majority got it wrong, said Kagan. She said that the FEC regulation does not limit a candidate’s right to use his own money to fund his campaign; rather, Kagan wrote, “The law impedes only his ability to use other people’s money to finance his campaign,” (emphasis hers).

While Kagan acknowledged that political speech is indeed worth of robust protection, she argued that the cap in question does little to limit a candidate’s ability to speak out on issues and poses no significant burden on free speech rights. Kagan continued and argued that any deterrent effect on candidate speech is at most an indirect one, indistinguishable from many other campaign finance regulations.

Kagan also responded directly to Roberts’ assertion that the government simply had no legitimate interest at stake in maintaining Section 304.

“Preventing quid pro quo corruption or its appearance is a compelling interest by any measure,” Kagan wrote, then spelled out just how in her view the majority’s decision would lead to corruption: “The recipe for quid pro quo corruption is thus in place: a donation to enhance the candidate’s own wealth (the quid), made when he has become able to use the power of public office to the donor’s advantage (the quo).”

Then, taking aim squarely at the majority, Kagan continued, “The heightened threat of corruption—and, even more, of its appearance—is self-evident (except, it seems, to observers allergic to all campaign finance regulation).”

Seizing on Roberts’ characterization that Section 304 is “prophylaxis-upon-prophylaxis,” Kagan provided an analogy. While “Regular seatbelts might suffice to protect drivers on the interstate,” she wrote, “special belts—and roll cages to boot—are essential measures on the racetrack.” Similarly, Congress enacted special anti-corruption measures to combat the increased risks of post-election fundraising.

Kagan also had little patience for Roberts’ dismissal of basic common sense as an underlying rationale for Section 304.

“It is in fact what everyone knows to be true—because everyone knows people (including politicians) will often do things for money,” Kagan said bluntly, and went on, “The majority suggests that we should discard our understanding of how the world works because the Government has not come forward with adjudicated instances of corruption in the loan-repayment context.” To underscore the obvious nature of the corruption at risk, Kagan offered several examples of actual political campaigns plagued by corruption when candidates were repaid for personal loans.

Kagan ended her 15-page dissent with the plainest of language for her colleagues in the majority:

It takes no political genius to see the heightened risk of corruption—the danger of “I’ll make you richer and you’ll make me richer” arrangements between donors and officeholders. Section 304 has guarded against that threat for two decades, but no longer. In discarding the statute, the Court fuels non-public-serving, self-interested governance. It injures the integrity, both actual and apparent, of the political process.

[image via Chip Somodevilla/Getty Images]

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Elura is a columnist and trial analyst for Law & Crime. Elura is also a former civil prosecutor for NYC's Administration for Children's Services, the CEO of Lawyer Up, and the author of How To Talk To Your Lawyer and the Legalese-to-English series. Follow Elura on Twitter @elurananos