WASHINGTON (CN) — As the U.S. heads into an election year, the Supreme Court will hear a case on Wednesday advocating for changing the limits for how much money candidates can recoup from their campaigns.
Candidates can spend unlimited amounts of money on their own campaigns, but they are limited when it comes to how much reimbursement they can seek after the election concludes for any loans they have made to their campaign. Under the Bipartisan Campaign Reform Act, an amendment to the Federal Election Campaign Act, a campaign can repay only up to $250,000 in candidate loans post-election. So long as the transaction occurs within 20 days of the election, however, campaigns can use pre-election funds to repay candidate loans exceeding that limit.
Senator Ted Cruz sued the Federal Election Commission in 2018 on the grounds that the loan-repayment limit violates the First Amendment. It was that year that the Texas Republican nearly lost his seat to one-time presidential hopeful Beto O'Rourke in a campaign that amassed a record $114.8 million in combined fundraising from both candidates.
For Cruz, the race not only put him back in Washington but gave him a case to challenge current campaign loan restrictions.
A day before Election Day in 2018, Cruz loaned his campaign $260,000 — $10,000 more than the FEC’s limit for repayment. With $2.38 million in pre-election funds on hand, the committee could have paid Cruz back in full immediately following the election. Because Cruz waited until after the 20-day deadline to inquire about repayment of the loan, however, he was subsequently paid back only $250,000 of his loan in accordance with the law. The government claims this was intentional.
A panel of three federal judges ruled for Cruz last year, saying the FEC’s limit on repayment restricts candidates’ free speech. The Supreme Court agreed to hear the case in September.
Regulatory officials say Cruz lacks standing to even bring the case. They say without evidence that Cruz's campaign used post-election contributions to repay his loan, he might not have yet even met the repayment limit. Focusing on the email Cruz sent to his campaign two days after the repayment window lapsed, they also argue that Cruz created this case purposefully to bring this suit.
“That email implies that repayment of the $250,000 was intentionally delayed until the 20-day post-election period had expired, thus triggering the regulatory requirement that the remaining $10,000 be recharacterized as a contribution by Senator Cruz to the campaign,” U.S. Solicitor General Elizabeth Prelogar briefed the high court. “The email also implies that Senator Cruz regarded delay in the repayment as otherwise undesirable. And appellees have stipulated that ‘the sole and exclusive motivation behind Senator Cruz’ actions in making the 2018 loan and the committee’s actions in waiting to repay them was to establish the factual basis for this challenge.’”
The government calls the loan repayment limit a “modest burden” intended to prevent bribery.
“That modest burden is tailored to serve Congress’s compelling interest in preventing actual and apparent quid pro quo corruption,” Prelogar wrote. “Contributions that repay a candidate’s personal loans pose a heightened risk of corruption because, like gifts, and unlike routine contributions, they add to the recipient’s personal wealth.”
The Brennan Center for Justice at NYU called the government’s interest in the case profound, saying that it undermines public trust for candidates to use campaign funds for personal benefit.
“Candidates’ and officeholders’ use of campaign fundraising to benefit themselves not only poses an inherently high risk of classic quid pro quo corruption, but also undermines the basic ideal of public service as a public trust, which is at the heart of our system of government and which Congress has wide latitude to defend,” the center wrote in a brief as friend of the court.
Cruz argues that no First Amendment right is more important to U.S. democracy than the ability of candidates to speak on their own behalf. He attacks the government’s arguments against his standing to bring the case and that he intentionally delayed repayment of his loan. Cruz claims that he was directly injured by the regulation and therefore has the ability to challenge the constitutionality of the provision that the regulation implements.
“As any first-year law student knows, if there is no valid authorizing statute, there can be no valid implementing regulation,” Charles Cooper, an attorney for the senator with the firm Cooper & Kirk, briefed the court. “That is, if the host perishes, so also must its parasite.”
The Senate's Republican minority leader meanwhile has backed Cruz in a friend-of-the-court brief that calls the FEC’s Bipartisan Campaign Reform Act a “constitutional train wreck.” Referring to the court’s previous decisions on BCRA as the “Humpty Dumpty of campaign-finance law,” Senator Mitch McConnell asks the court to get rid of the entire statute.
McConnell, who is represented by former President Donald Trump’s White House counsel Donald McGahn, says BCRA should be put “out to pasture.”
“If this Court holds the loan-repayment limit unconstitutional, the key provision that made BCRA politically viable (the “Millionaire’s Amendment”) will be completely scuttled,” McConnell’s brief states.
The Department of Justice and Cruz’s attorney did not respond to requests for comment.
Follow @KelseyReichmann
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
Additional Reads
-
-
Denmark aims to rebuild historic stock exchange after blaze April 24, 2024
