Judges hear Cruz challenge $250,000 cap on repayment of candidate loans with post-election donations

WASHINGTON — Conservatives have bristled for decades at campaign spending caps. On Wednesday morning, the Supreme Court echoed Sen. Ted Cruz’s effort to strike down a $250,000 limit on how much a candidate can recover from post-election donations to repay personal loans.

The cap is intended to prevent corruption, but Cruz argues that if donors can repay a candidate’s loan to their own campaign before Election Day, they should also be able to do so after they win.

It’s a fight the Texas Republican spent $10,000 on, out of his own pocket.

Government watchdogs view with concern the latest efforts to erode anti-corruption provisions in a 2002 bipartisan campaign finance law. The Justice Department, which defends the law, warns that allowing donors to pay money in a politician’s pocket after election day invites corruption.

Cruz and his allies call the restriction onerous and note that donors can’t cut checks over $2,900 per election anyway — a limit that itself avoids bribery whether those checks come before or after the day. of the ballot.

“Congress effectively gives a corruption pass to the top 86 donors who max out after an election, but abruptly closes the corruption window on donor number 87,” Cruz’s attorney Charles Cooper argued for 90 minutes of argument.

On the last day of the 2018 race with Democrat Beto O’Rourke before voters returned him to the Senate, Cruz loaned his campaign $260,000. The campaign did not need money. Cruz raised $46 million in what became the most expensive Senate race in history, though after the 2020 cycle he isn’t even in the top 10 anymore.

The FEC’s first post-election deposit showed enough money to reimburse the senator in full — $262,800 beginning 20 days after Election Day. Over the next month, all but $10,000 of the debt was paid off, in four installments ranging from $25,000 to $100,000.

In other words, according to the Justice Department, the only reason Cruz doesn’t have the money isn’t campaign finance law — it’s because he chose to. to be.

Malcolm Stewart, the United States Deputy Solicitor General, compared Cruz to a McDonald’s customer who knows the coffee is too hot and pours it anyway, in order to sue the fast-food chain for negligence.

Judges across the ideological spectrum were dubious, noting that legal history is replete with plaintiffs who have submitted to constitutional infringement in order to challenge a law.

To them, Cruz voluntarily giving up the $10,000 in order to choose this fight is akin to a couple trying to buy a house in order to prove discrimination, even though they never intend to close the deal. case.

As to whether the $2,900 donor cap is in itself sufficient to prevent corruption, Stewart insisted that a donation that goes directly to a candidate’s personal results is a gift. “The limits on gifts to federal officials are much lower. We worry about corruption at a much lower level when the money goes into the pocket of the candidate,” he argued.

Cruz’s lawyer claimed the loan repayment cap forces a candidate to think twice before lending money to their own campaign, which deters them from exercising their free speech rights.

The provision at issue is part of the Bipartisan Campaign Reform Act of 2002, signed into law by President George W. Bush.

Senate Minority Leader Mitch McConnell, R-Ky., called it a “constitutional wreck” from the start, in a friendly court filing.

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

The biggest blow came in 2010, with the Citizens United decision which opened the door to super PACs and unlimited corporate spending on campaign ads. The 5-4 court sided with a conservative group that the FEC had blocked from promoting a movie accusing Hillary Clinton of corruption.

The loan repayment ceiling is only the last provision in the line of fire.

“The limit chills grassroots political discourse, especially the discourse of unknown challengers who have to spend more to be heard. And the loan repayment limit serves no legitimate government interest,” McConnell argued.

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

There is also an important distinction between a candidate lending money to a campaign or outright spending personal funds.

Watchdog groups don’t like the idea of ​​wealthy candidates buying a Senate seat. Neither did voters, and the campaign’s history is filled with defeated candidates who dug deep into their fortunes.

The justices wrestled at length with the proposition that candidate loans actually pose a greater risk of corruption because donors know exactly who won the election and how to line the pockets of the winner.

“The candidate with $3,000 in debt is much less likely to start thinking about how he can sell his votes than the candidate with $500,000 in debt,” Judge Elena Kagan told Cruz’s attorney. So, she said, even if the first and 87th donor cutting a check for $2,900 isn’t thinking about a match, a candidate just might be.

“I don’t know why you’re arguing that it’s like a gift,” she told Cooper. “One day, I had a loan of $10,000. The next day, I don’t. Someone just made me $10,000 richer.

Cooper pushed back.

“A repayment of a loan is not a gift,” he insisted, adding later that donations spent – whether on paying rent or advertisements or repaying a candidate’s loan – should not make no difference.

Other than the cap of $2,900 per person, “Congress has not limited post-election contributions,” Cooper noted. “Congress does not view these post-election contributions as gains.”

The case could determine if Cruz, in choosing this fight, was not careful enough in how and when he transferred funds.

Cruz’s campaign didn’t need the money the day before Election Day and had enough funds to pay off the debt. That, the Biden administration argued, means he didn’t make the loan to fund political speech, but entirely to lay the groundwork for this lawsuit — and that means he couldn’t have suffered a violation of freedom of expression.

Moreover, the Department of Justice, he did not even claim – much less prove – that he repaid the loan using the funds raised after Election day.

On the contrary, the Cruz campaign conceded early in the fight that “none of the $250,000 of the loan that was repaid came from contributions collected after the election.” The campaign committee said it also didn’t bother “to undertake the senseless task of trying to trace what fungible dollars were used to repay Cruz’s loans.”

Given that, according to the government, the senator could now even collect an additional $10,000 from his campaign account without breaking the law, and the FEC could not prove a violation.

Cruz disputes this.

As for the claim that Cruz lacks standing because he chose to waive the $10,000 by waiting more than 20 days, his attorney pointed to Plessy v. Ferguson, a landmark case that challenged split trains. in the south.

“At least since Mr. Plessy sat in the whites-only car,” 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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