Today, the conservative majority of United States Supreme Court struck down a law that prevents potential corruption from arising when politicians make large personal loans to their own campaigns only to repay them with donations received after Election Day.
The 6-3 ruling once again allowed five justices appointed by Republican presidents who failed to win a majority of the popular vote to make a substantial change in the law governing how America’s elections are conducted.
Candidates will now be able to pour millions of dollars in personal loans into their campaigns that can be repaid after the election, allowing special interest donors to effectively deposit money into a politician’s personal bank account.
The federal law, part of the Bipartisan Campaign Reform Act, limited candidates from using more than $250,000 in contributions raised after the date of an election to repay outstanding personal loans candidates make to their campaigns.
In 2018, Texas Senator Ted Cruz put $260,000 of his own money into his reelection and sued the FEC the following year, complaining that this law prevented him from paying off the last $10,000 with post-election contributions.
Last June, the United States Court of Appeals for the District of Columbia Circuit sided with Cruz, striking down the limit on the amount candidates can raise post-election to repay personal loans to their campaigns.
The Supreme Court on Monday gave Texas Senator Ted Cruz a victory in his legal challenge to federal limits on the amount of money candidates can raise from donors to repay personal loans after an election, but the ruling is a loss for Americans who want honest government.
The court struck down a $250,000 cap on the amount of post-election funds a candidate can be repaid for personal loans they made to their campaign, finding that the restriction violated the First Amendment.
“Today’s ruling is the latest blow struck by the Roberts Court against common sense campaign finance laws designed to curb corruption and potential corruption by our federal officials,” said Common Cause President Karen Hobert Flynn. “The U.S. Supreme Court with its current majority has showed its hostility to effective (and popular) laws enacted to fight political corruption and ensure our elected officials are more responsive to the public, not just the wealthy few.”
“Today’s decision from the Supreme Court of the United States in FEC v. Ted Cruz for Senate is a disappointing one,” said Trevor Potter, president of Campaign Legal Center. “American campaign finance laws are designed to limit political giving that overly indebts officeholders to donors and results in political favors.”
Allowing candidates to solicit unlimited post-election contributions to repay their personal campaign loans puts donor money in the politician’s pockets, creating an opportunity for special interests to rig the political system with payoffs.
The 6-3 ruling split along familiar ideological lines, with the court’s conservatives siding with Cruz over a dissent from the court’s three liberals.
Chief Justice John Roberts, writing for the majority, said that penalizing candidates who exceeded the $250,000 cap — as Cruz did — would unduly burden a candidate’s constitutional right “to use his own money to facilitate political speech.”
“By restricting the sources of funds that campaigns may use to repay candidate loans, (the regulation) increases the risk that such loans will not be repaid,” Roberts wrote. “That in turn inhibits candidates from loaning money to their campaigns in the first place, burdening core speech.”
The dispute arose after Cruz put $260,000 of his own money into his 2018 reelection campaign. The following year, as he sought to pay off his debt in excess of the federal limit, Cruz sued the Federal Election Commission (FEC), teeing up a constitutional challenge to the law.
Cruz prevailed on his constitutional claim in a lower federal court last summer when a three-judge panel ruled that the provision of the 2002 statute at issue — the 2002 Bipartisan Campaign Reform Act — violated his free speech rights. The FEC later appealed to the Supreme Court.
At stake in this case was a provision in the Federal Election Campaign Act (FECA) that set a modest $250,000 limit on post-election fundraising to retire candidate loans and had largely operated without controversy since its adoption as part of the McCain-Feingold Act in 2002. Campaign Legal Center, joined by Citizens for Responsibility and Ethics in Washington, Common Cause and Democracy 21, had filed an amicus brief in this case, defending the law.
In holding the limit unconstitutional, the Court’s majority dismissed widely shared and self-evident concerns regarding the corruptive potential of post-election candidate loan repayments – which function like gifts that line the pockets of candidates after Election Day. The reasons for these concerns are documented in the record before the court. Voters are also unable to properly take into consideration this fundraising as these “gifts” come after votes have already been cast.
This decision conflicts not only with the Supreme Court’s longstanding recognition that putting money into candidates’ pockets creates an inherent risk of corruption but also with common sense and historical experience. As CLC’s amicus brief made clear – in a section Justice Kagan cited in her dissent – there is abundant evidence from across the country that post-election contributions can give rise to actual and apparent corruption.
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.
Monday’s decision is the latest example of the court’s steady erosion of the 2002 campaign finance statute, having previously struck down its provision to restrict the power of wealthy self-funding candidates, a ban on corporate political spending and limits on the amount of money a donor can give in each election cycle.
In a blistering dissent, the court’s three liberals said the ruling would embolden quid pro quo corruption. To illustrate the point, Justice Elena Kagan described a scenario in which a newly elected politician who loaned his campaign $500,000 turns to wealthy donors and corporate lobbyists after an election to recoup his debt.
“And as they paid him, so he will pay them,” Kagan said of the benefactors. “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.”
The ruling handed a defeat to the Biden administration, which urged the justices to sustain the repayment cap during oral arguments in January.
Malcolm Stewart, a Justice Department lawyer who argued on behalf of the FEC, said the court should turn away what he characterized as Cruz’s “self-inflicted” and “manufactured” legal injury.
He likened Cruz’s strategy to that of a plaintiff who buys hot McDonald’s coffee and intentionally pours it on themselves to lay the groundwork for a lucrative lawsuit.
But the majority on Monday found that Cruz had a clear right to bring the challenge, finding that his legal injury was “directly inflicted” by the FEC.
“That (the challengers) 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 for the majority.