Loans

Justices hear Cruz challenge to $250k cap on repaying candidate loans with post-election donations

Justices hear Cruz challenge to $250k cap on repaying candidate loans with post-election donations
Written by Publishing Team

WASHINGTON – Conservatives have worried for decades about capping their campaign spending. On Wednesday morning, the Supreme Court considered Senator Ted Cruz’s effort to strike down the $250,000 cap on how much a candidate can recoup in post-election donations to pay off personal loans.

It’s a battle the Texas Republican spent $10,000 to pick out of his own pocket.

Government observers view with concern the latest efforts to undermine the anti-corruption provisions of the bipartisan Campaign Finance Act of 2002.

The Justice Department, which defends the law, warns that allowing donors to pour money into a politician’s pockets after Election Day invites corruption.

(Oral arguments started at 9 a.m. Listen here or here.)

Cruz and his allies describe the restriction as onerous and note that donors cannot cut checks over $2,900 per election — a limit that in itself prevents corruption, whether those checks come before or after election day.

On the final day of the 2018 race with Democrat Beto O’Rourke before voters returned him to the Senate, Cruz loaned his campaign $260,000.

Cruz’s campaign didn’t need the money. Cruz raised $46 million in what has become the most expensive Senate race in history, although after the 2020 session he is no longer even in the top 10.

The first post-election campaign FEC filing showed enough cash to pay the senator in full – $262,800 as of 20 days after Election Day. Over the next month, all but $10,000 of debt was paid off, in four installments of $25,000 to $100,000.

In other words, the Justice Department has argued, the only reason Cruz is out of any money isn’t campaign finance law — he chose to be. Malcolm Stewart, the deputy US attorney general, likened Cruz to a woman who heard McDonald’s served coffee too hot, then bought a mug and poured it on herself in order to sue the fast-food chain for negligence.

Judges across the ideological spectrum were skeptical of this line of argument. For them, Cruz voluntarily giving up $10,000 in order to pick this legal battle is akin to a couple trying to buy a home in order to prove discrimination, even if they don’t intend to go through with the deal.

As for whether the $2,900 donor cap is by itself sufficient to avoid corruption, Stewart insisted that the way to look at a donation that goes directly to the candidates’ personal bottom line, by helping to erase debt, is more like a gift. “The restrictions on gifts for federal officials are much lower. We are concerned about corruption at a much lower level when the money goes into a candidate’s pocket.

Cruz, in a brief provided ahead of Wednesday’s arguments, argued that the loan repayment cap “forces a candidate to think twice” before lending money to his campaign — a deterrent if not outright preventing him from exercising his rights to free speech.

The item in question is part of the 2002 Bipartisan Campaign Reform Act, which President George W. Bush signed into law.

Senate Minority Leader Mitch McConnell, R-Kentucky, called it a “constitutional train wreck” from the start, in one of his friends in the lawsuit.

McConnell challenged the law immediately. But in a 2003 ruling bearing his name, he lost to the Supreme Court. He now boasts that the Supreme Court has since dismantled the law.

The biggest blow came in 2010, with a Citizens United decision that opened the door to super PACs and unlimited corporate spending on campaign ads. Court 5-4 sided with a conservative group that banned the Federal Election Commission from promoting a film accusing Hillary Clinton of corruption.

The maximum loan repayment is only the latest item in the collision.

“Limiting limits sends chills in basic political discourse, especially that of anonymous competitors who need to spend more to be heard. McConnell argued that a loan repayment limit does not serve any legitimate government interest.”

The government claims that the loan repayment cap imposes a modest burden on political discourse at most.

There is also an important distinction between a candidate who lends money to a campaign, or who spends personal money directly.

Monitor groups don’t like the idea of ​​wealthy candidates buying a Senate seat. So are the voters, and the campaign history is filled with defeated candidates who have deepened their fortunes.

But loans from a candidate actually pose a greater risk of corruption, and a strong justification for the $250,000 cap, the Justice Department sees it, because once victory is at hand, a donation is “comparable to a gift.”

The Justice Department said Cruz “did not argue that gifts that add to a candidate’s personal wealth pose a greater risk of corruption than contributions that may be used solely for campaign-related purposes.”

The issue could revolve around whether Cruz, in his choice of this fight, was not careful enough with how and when to transfer the money.

The fact that Cruz’s campaign didn’t need the money the day before Election Day, and had enough money to repay the debt, means Cruz made the loan “not to fund political rhetoric, but to lay the groundwork for this lawsuit,” the government argued in its last briefing before oral arguments on Wednesday — This means that he could not have suffered an injury to freedom of expression.

In addition, the Department of Justice, he did not even claim – let alone prove – that he repaid the loan using the money raised after Election day.

Instead, Cruz’s campaign acknowledged early in the fight that “none of the $250,000 in loan repaid were from contributions raised after the election.”

The campaign committee said it did not bother “to take on the meaningless task of trying to track down the exchangeable dollars that were used to pay off the Cruise loans.”

Given that, the government argued, the senator could now collect another $10,000 from his campaign account without violating the law, and the FEC could not prove a violation.

The government says such “self-harm” does not give Cruz the capacity to defy the law.

Cruz argues that.

He said the senator is executing a loan that “was subject to the limit for which the committee had to default in part because of the limit.”

Just because Cruz chose to wait more than 20 days, and thus forfeit $10,000 in order to challenge the law, does not disqualify him from standing up, his legal team argued, noting that many civil rights cases hinged on deliberate defiance of questionable restrictions — including those in schools and public buses.

As for the argument that post-election donations increase the risk of corruption, Cruz’s legal team mocked.

The Campaign Finance Act already defines individual donations. The current cap is $2,900 per donor per candidate per election.

So, Cruz said, if the number of donors reaches a limit to cancel his remaining debt, that cannot be evidence of corruption since $2,900 “cannot be considered legally corrupt.”

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