Sen. Cruz Victorious in Campaign Finance Case

WASHINGTON  —  Sen. Ted Cruz. R-Texas, has prevailed in his Supreme Court challenge to a provision of federal campaign law, but in dissent at least one justice believes the ruling “can only bring this country’s political system into further disrepute.”

On its face, the underlying case may have seemed like small potatoes to those unacquainted with campaign finance law. 

It hinged on a section of the 2002 Bipartisan Campaign Reform Act that deals with the repayment of loans that a candidate makes to their own campaign.

In 2018, Cruz narrowly won over his Democratic challenger Beto O’Rourke. In the end, by Texas standards, it was a squeaker, with Cruz winning by just 219,000 votes or about 2.6 percentage points. 

On Nov. 5, 2018, the day before Election Day and with the outcome far from certain, Cruz gave Ted Cruz for Senate, his campaign committee, two loans totalling $260,000.

Following the election, the Cruz committee used the funds it had on hand to pay vendors and meet other obligations instead of repaying the loans made by the senator.

The Bipartisan Campaign Reform Act places a $250,000 limit on the amount of post-election contributions that can be used to pay back a candidate’s pre-election loans more than 20 days after Election Day.

But the Cruz campaign waited more than 20 days to get to Cruz’s loans, only getting around to them in early December 2018.

Because the 20 days had elapsed, the campaign repaid Cruz just $250,000; the amount of the loans that still exceeded the statutory cap — $10,000 — was converted into a campaign contribution.

The Ted Cruz for Senate committee sued the Federal Election Commission to invalidate the conversion and to enjoin the agency from enforcing the relevant section of the Bipartisan Campaign Reform Act. 

In doing so, it argued the restrictions created by the act violated both constitutional and administrative laws.

On Monday, the Supreme Court’s conservative majority sided with the senator in a 6-3 ruling.

Writing for the majority, Chief Justice John Roberts said the provision “burdens core political speech without proper justification.”

In her dissent Justice Elena Kagan said that striking the provision down “greenlights all the sordid bargains Congress thought right to stop.” 

Later Kagan, who was joined by Justices Sonia Sotomayor and Stephen Breyer in dissent, wrote, the provision struck down Monday “targets a practice posing exceptional risks of quid pro quo deals.” 

“Repaying a candidate’s loan after he has won election cannot serve the usual purposes of a contribution: The money comes too late to aid in any of his campaign activities. All the money does is enrich the candidate personally at a time when he can return the favor — by a vote, a contract, an appointment,” she said. 

“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.” 

According to the Associated Press, in the five election cycles prior to 2020, candidates for Senate made 588 loans to their campaigns, about 80% of them under $250,000. 

Candidates for the House made 3,444 loans, nearly 90% under $250,000.

In a lengthy written statement, Trevor Potter, president of Campaign Legal Center, said Monday’s ruling by the high court was a “disappointing one.”

“American campaign finance laws are designed to limit political giving that overly indebts officeholders to donors and results in political favors,” Potter said. “Permitting candidates to solicit unlimited post-election contributions to repay their personal campaign loans and put the donor money in their own pockets gives an obvious and lamentable opening for special interests to purchase official favors and rig the political system in their favor.”

Later Potter wrote the court’s decision “conflicts not only with the Supreme Court’s long-standing recognition that putting money into candidates’ pockets creates an inherent risk of corruption but also with common sense and historical experience.” 

“While the direct effects of this decision are limited to the narrow federal provision at issue in the case, it reveals a Supreme Court increasingly out of step with the American people — who overwhelmingly recognize that unchecked campaign giving poses profound risks to the integrity of our democracy. More immediately, the ruling could imperil an array of similar restrictions on post-election loan repayments adopted at the state and local level out of legitimate concerns over corruption,” Potter said.

Dan can be reached at [email protected] and @DanMcCue