WASHINGTON — The Supreme Court took up Sen. Ted Cruz’s effort to overturn a cap on repaying personal loans with post-election donations, with the senator’s lawyer arguing that if he can’t be corrupted for $250,000, he can’t be bought for another $10,000, either.
Before or after the election, donors can’t cut checks bigger than $2,900 during an election cycle for a federal candidate.
Justices wrestled with whether the timing of those donations makes a difference, legally and ethically. Many embraced the Biden administration’s argument that when donors pay off a candidate’s personal debt after they know who won, that looks a lot like a forbidden gift.
But the Texas Republican’s lawyer challenged the logic in letting candidates wipe away unlimited loans using donations that pour in before Election Day, while imposing a cap 20 days later.
“Congress effectively gives a corruption hall pass to the first 86 donors who max out after an election, but abruptly closes the corruption window on donor number 87,” argued Cruz’s lawyer, Charles Cooper, during 90 minutes of oral argument.
The case pits money as free speech claims against the government’s interest in curbing graft. And it’s a fight that Cruz spent $10,000 to pick, out of his own pocket.
Conservatives have bristled for decades at campaign spending caps. Government watchdogs view with alarm the latest effort to erode anti-corruption provisions in the Bipartisan Campaign Reform Act of 2002, signed into law by former President George W. Bush.
The Justice Department, defending that law and the Federal Election Commission regulations to implement it, warned that there is in fact a big risk of corruptions if donors can pour unlimited sums into a politician’s pockets after Election Day.
The day before his victory over Democrat Beto O’Rourke in 2018, Cruz loaned his campaign $260,000. The campaign didn’t need the money. Cruz raised $46 million in what became the most expensive Senate race in history, though after the 2020 cycle it’s not even in the top 10 anymore.
The Cruz campaign reported ample cash 20 days after Election Day to repay the senator in full: $262,800. Over the next month, all but $10,000 of the debt was repaid, in four installments from $25,000 to $100,000.
In other words, the Justice Department argued, the only reason Cruz is out any money isn’t federal campaign finance law – it’s that he chose to be.
Malcolm Stewart, the deputy U.S. solicitor general, likened Cruz to a McDonald’s customer who knows the coffee is too hot and pours it on herself anyway, in order to sue the fast food chain for negligence.
The fact that his injury was voluntary and self-inflicted, the government asserted, means Cruz lacks standing to challenge the limit.
Across the ideological spectrum, justices were dubious, noting that legal history is replete with plaintiffs who subjected themselves to a constitutional injury in order to challenge a law. Chief Justice John Roberts likened Cruz’s decision to forfeit $10,000 in order to pick this fight is akin to a couple that tries to buy a house to expose discrimination.
Whether they intend to go through with the deal isn’t relevant, Roberts said.
A ruling is expected by the end of June.
As for whether the $2,900 donor cap is enough to avert corruption, Stewart insisted that a donation that goes straight to a candidates’ personal bottom line is a gift – though he struggled to explain why that’s true only after Election Day.
“The limits on gifts to federal officials are much lower” than $2,900, he noted, because “we worry about corruption at a much lower level when the money is going into the candidate’s pocket.”
Cruz’s lawyer asserted that the loan repayment cap deters candidates from lending money to their own campaigns, and that such impact infringes on political speech rights guaranteed by the First Amendment.
The government brushed off the cap as at most, a modest burden justified by anti-corruption goals. At one point, Stewart acknowledged there’s nothing magical about $250,000. It’s just a level the FEC picked to strike a balance, a line of argument that animated much of the discussion in court.
“The candidate with $3,000 of debt is a lot less likely to start thinking about how he can sell his votes than the candidate with $500,000 of debt,” Justice Elena Kagan told Cruz’s attorney. So, she said, even if the first and 87th donors cut the same $2,900 check, and even if neither is thinking about a quid pro quo, a candidate deep in debt might be.
“I don’t know why you contest that this is like a gift,” she said. “One day I had a $10,000 loan. The next day I don’t. I’m $10,000 richer. Somebody just made a $10,000 gift.”
Cooper pushed back.
“A repayment of a loan is not a gift,” he insisted, adding later that donations are spent – whether to pay for rent or ads or to repay a loan from the candidate – should make no difference.
Other than the $2,900-per-person cap, “Congress hasn’t limited post-election contributions,” Cooper noted. “Congress does not see those post-election contributions as being payoffs.”
Picking a fight
Senate Minority Leader Mitch McConnell, R-Ky., called the 2002 law a “constitutional train wreck” from the outset and challenged the law immediately. But in a 2003 ruling that bears his name, he lost at the Supreme Court. He boasts now that the high court has been dismantling the law ever since.
The biggest blow came in 2010, with the Citizens United ruling. That opened the door to super PACs and unlimited corporate spending on campaign ads. The 5-4 court sided with a conservative group the FEC had blocked from promoting a film that accused Hillary Clinton of corruption.
The loan-repayment cap is only the latest provision in the crosshairs.
“The limit chills core political speech, especially speech by unknown challengers who need to spend more to be heard. And the loan-repayment limit does not serve any legitimate government interest,” McConnell argued in a friend of the court filing supporting Cruz.
Watchdog groups don’t much like the idea of wealthy candidates buying a Senate seat. Nor do voters, and campaign history is filled with defeated candidates who dug deep into their fortunes.
The case could turn on whether Cruz, in picking this fight, wasn’t careful enough in how and when he shifted funds.
Cruz’s campaign didn’t need the money on the day before Election Day, and it had ample funds to repay the debt. That, the Biden administration argued, means he didn’t make the loan to fund ads or any other form of political speech, but solely to lay a foundation for this lawsuit – and that means he couldn’t have suffered a constitutional injury.
The Justice Department also pointed out that Cruz hasn’t even claimed– let alone proved – that he repaid the first $250,000 using funds raised after Election Day. At various points in the litigation, campaign officials said none of it was repaid with post-election donations, and that they didn’t “undertake the meaningless task of attempting to trace which fungible dollars were used to repay Cruz’s loans.”
Given that, the government argued, the senator could even now collect another $10,000 from his campaign account, without violating the law.
Cruz disputes that.
As for the claim that Cruz lacks standing because he chose to forfeit the $10,000 by waiting more than 20 days, his lawyer pointed to Plessy vs. Ferguson, a landmark case that challenged segregated trains in the South.
“At least since Mr. Plessy sat down in the train car reserved for whites” the Supreme Court has recognized that sometimes, the only way for a plaintiff to challenge a law is to violate it, Cooper said.
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