WASHINGTON (CN) — GOP Senator Ted Cruz is calling on a federal court panel to strike down a Federal Election Commission rule limiting post-election donations to pay back money he loaned his 2018 campaign, in a case heard in Washington on Wednesday.
A Texas Republican, Cruz gave two loans to his campaign in the last run for reelection. The donations totaled $260,000 — $5,000 from his personal bank accounts and $255,000 originating from a loan on personal assets.
But a campaign finance law caps the amount of money a campaign committee can repay a candidate for personal loans at $250,000.
Cruz sued last year, accusing the commission of limiting the First Amendment right to political speech for candidates, their campaign committees and donors by setting a time limit on donations and on a candidate’s ability to spend personal funds for campaign speech.
Attorney Charles Cooper, representing Cruz, argued to a three-judge district court panel on Wednesday that candidates will be deterred from loaning money to their campaign because of the rule.
“Restrictive terms act as a disincentive or a deterrent to make the loan in the first place,” Cooper said.
But the FEC pushed back, saying the regulation is necessary to prevent quid pro quo corruption.
“This is a very targeted restriction,” FEC attorney Harry Summers said.
Congress was out to limit the appearance of corruption when it passed the law in 2002. Campaigns can make the choice to pay back candidates’ loans from money in hand after Election Day, rather than rely on post-election donations, the FEC attorney argued.
In Cruz’s case, his campaign had $2.2 million to pay off $2.5 million in debt after the 2018 election but paid back vendors and other expenses rather than the senator for his personal loans.
“It’s really not a matter of speech, but a matter of financial decision making,” Summers said.
U.S. District Judge Amit Mehta questioned whether Cruz had demonstrated that candidates were routinely deterred from loaning to their campaigns because of the FEC rule.
“It’s unclear to me how you even get out of the starting gate,” the Obama appointee said.
Cooper, the senator’s attorney, pointed to an FEC study that found the 2002 rule had a “material impact on the propensity of many politicians to make large loans.”
He also scoffed at an argument from the FEC that the rule increases financial disclosure among political office holders.
“If the issue was to force contributors into the sunlight of pre-election contributions, well then they [Congress] would have limited all post-election contributions,” he said.
But the FEC defended Congress’ regulatory reach, saying that lawmakers can proceed incrementally.
“There really is no constitutional right to get your campaign spending back,” Summers argued.
The trust of voters is at stake, the FEC has argued in the legal battle, presenting the court with an April 2020 poll finding that 81% of 1,000 respondents said they believed donors giving money to a federal candidate’s campaign after an election will be “very likely” or “likely” to expect a political favor in return.
But Mehta questioned the legitimacy of the poll given that respondents were not told that the donation cap post-election is the same as the $2,8000 individual limit when a candidate is running.
Defending the poll, Summers said the phrasing didn’t diminish the findings and that it gave Americans a view of the critical factors.
But U.S. Circuit Judge Neomi Rao, participating at the district court hearing on the three-judge panel along with fellow Trump appointee U.S. District Judge Timothy Kelly, repeatedly questioned whether the court should take at face value the FEC’s purported interest: preventing quid pro quo corruption.
Cooper leapt at the question to argue that the FEC must demonstrate that the cited harms are real.
But Summers, representing the commission, rebutted that the Supreme Court in the landmark campaign finance case Buckley v. Valeo said isolating instances of quid pro quo is challenging, all the more so, the attorney argued, because the FEC rule in question has been in effect nearly 20 years.
Rao followed up by saying that if the concern was corruption then the limit on donations that can pay back money directly into a candidate’s personal accounts should be zero, not $250,000.
“Congress is trying to strike a balance,” Summers replied. “It is not required to regulate all activity. It can go step by step.”
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