The Supreme Court of the United States will hear oral arguments on Wednesday in Federal Election Commission v. Ted Cruz for Senate, a case in which Senator Ted Cruz’s (R-Tex.) campaign challenges federal anti-corruption laws that restrict how private loans can be repaid by political campaigns.
As Cruz sought re-election, he loaned $260,000 in personal funds to his election committee. As intended by Cruz, the exact timing and amount of the loan (made just one day before the general election) presented a problem. Under federal law, there is a $250,000 cap on repayment. Candidates can make personal loans to their campaign, but amounts above that $250,000 may only be repaid with pre-election contributions, and only if those repayments occur within 20 days following the election. Anything exceeding the limit must be recharacterized as a contribution, and not a loan.
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. In this way, Cruz established actual financial harm suffered as a result of Section 304 of the Bipartisan Campaign Reform Act of 2002 (“BCRA”) — the campaign finance law establishing the loan-repayment limit. Cruz then challenged Section 304 in court, arguing that the loan-repayment limitation violates the First Amendment.
The Federal Election Commission (FEC), however, argues that Section 304 is necessary to mitigate the risk of corruption when candidates repay their own personal loans.
Two questions at issue in the case are: 1) Whether Cruz has standing to challenge the loan-repayment law; and 2) if he does have standing, whether the loan-repayment limit violates the Free Speech Clause of the First Amendment.
Cruz’s argument, from his brief to the Supreme Court, goes as follows:
Section 304, by design and effect, deters candidates from loaning money to their campaigns, through the mechanism of restricting the campaign’s ability to repay those loans. It caps, at $250,000, the amount of candidate loans that a committee may repay using funds raised after election day. To be sure, the loans may still be repaid with funds raised prior to the election, but there can be no question that Section 304’s limit—by substantially increasing the risk that any candidate loan will never be fully repaid—forces a candidate to think twice before making those loans in the first place.
The FEC argues that Cruz has not established standing as “appellees do not even assert—let alone cite record evidence showing— that they used post-election funds to repay Senator Cruz $250,000,” pointing to Cruz’s statement that “attempting to trace which fungible dollars were used to repay Cruz’s loans” would have been “meaningless.” On the First Amendment challenge, the FEC argues that Section 304 is “narrow,” and at most, places only a moderate burden on political speech. The FEC points out that in the five election cycles prior to 2020, just 12 of the 588 loans made by Senate candidates and 26 of the 3,444 loans made by House candidates were subject to the restriction. “In any event,” the FEC argues, “the limit satisfies any potentially applicable standard of review, including strict scrutiny, because it serves the compelling interest in preventing actual and apparent quid pro quo corruption.”
The Brennan Center, which filed an amicus brief in support of the FEC rule, calls Section 304 “a straightforward anti-corruption measure.” In a piece detailing the Brennan Center’s position in the case, attorneys Daniel I. Weiner and John J. Martin, explained:
The Supreme Court has held that candidates have the right to spend as much of their own money as they want to get elected — wealthy self-funders often tout their lack of reliance on donors as proof that they are incorruptible (an argument the Court itself has echoed). But fundraising after an election to recoup personal funds turns this argument on its head: Instead of being independent from donors, a winning candidate — now an elected official — is raising money that will go directly into the official’s own pocket. The corruption risk is obvious.
The justices will hear Cruz’s challenge to Section 304 12 years after the Court’s landmark 5-4 decision in Citizens United v. Federal Election Commission, which effectively dismantled a series of campagin finance reform rules known as McCain-Feingold. Citizens United has since become a rallying point for conservatives who seek to further the First Amendment rights of entities, and to solidify the concept of financial contribution as protected speech.
[Photo by Chip Somodevilla/Getty Images]
Editor’s note: This piece was updated from its original version to include the name of an additional author of a cited work.
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