Supreme Court sides with Ted Cruz, striking down cap on use of campaign funds to repay personal campaign loans

CNN

By Ariane de Vogue and Fredreka Schouten, CNN

The Supreme Court on Monday ruled in favor of Republican Sen. Ted Cruz of Texas in a case involving the use of campaign funds to repay personal campaign loans, dealing the latest blow to campaign finance regulations.

The court said that a federal cap on candidates using political contributions after an election to recoup personal loans made to their campaign was unconstitutional.

Chief Justice John Roberts wrote the 6-3 decision. Justice Elena Kagan wrote the dissent for her liberal colleagues, Justice Stephen Breyer and Justice Sonia Sotomayor.

“The question is whether this restriction violates the First Amendment rights of candidates and their campaigns to engage in political speech,” Roberts wrote. He said there is “no doubt” that the law does burden First Amendment electoral speech. “Any such law must be at least justified by a permissible interest,” he added, and the government had not been able to identify a single case of so-called “quid pro quo” corruption.

Roberts concluded that the “provision burdens core political speech without proper justification.”

In her dissenting opinion, Kagan criticized the majority for ruling against a law that she said was meant to combat “a special danger of corruption” aimed at “political contributions that will line a candidate’s own pockets.”

“In striking down the law today,” she wrote, “the Court greenlights all the sordid bargains Congress thought right to stop. . . . In allowing those payments to go forward unrestrained, today’s decision can only bring this country’s political system into further disrepute.”

Indeed, she explained, “Repaying a candidate’s loan after he has won election cannot serve the usual purposes of a contribution: The money comes too late to aid in any of his campaign activities. All the money does is enrich the candidate personally at a time when he can return the favor — by a vote, a contract, an appointment. It takes no political genius to see the heightened risk of corruption — the danger of ‘I’ll make you richer and you’ll make me richer’ arrangements between donors and officeholders.”

In a statement after the ruling, attorney Charles Cooper, who represented Cruz in the case, praised the decision as a “victory for the First Amendment’s guarantee of freedom of speech in the political process.”

In the case, campaign finance regulators at the Federal Election Commission argued that the cap — a part of the Bipartisan Campaign Reform Act of 2002 — is necessary to protect against corruption, but a three-judge appellate court ruled in favor of Cruz last year, holding that the loan-repayment restriction violates his First Amendment right to free speech.

At oral arguments at the Supreme Court, the conservative justices seemed skeptical of the government’s claims that the law serves a purpose of fighting corruption.

Justice Amy Coney Barrett said that Cruz had emphasized that the after-election repayment scheme would simply replenish his coffers from money he had loaned. “This doesn’t enrich him personally, because he’s no better off than he was before,” she said, adding, “It’s paying a loan, not lining his pockets.”

And Justice Brett Kavanaugh said that a candidate may feel reluctant to loan money before the campaign out of fear he would not be able to recoup it. “That seems to be,” he said, “a chill on your ability to loan your campaign money.”

Kavanaugh echoed a lower court opinion that went in favor of Cruz.

“A candidate’s loan to his campaign is an expenditure that may be used for expressive acts,” the court said in an opinion written by DC Circuit Court of Appeals Judge Neomi Rao. She and DC District Court Judges Amit Mehta and Timothy Kelly ruled unanimously.

“Such expressive acts are burdened when a candidate is inhibited from making a personal loan, or incurring one, out of concern that she will be left holding the bag on any unpaid campaign debt,” the ruling added.

Biden administration and campaign finance watchdogs supported limits

Federal law allows candidate to make loans to their campaign committees without limit. Cruz was challenging a provision of the Bipartisan Campaign Reform Act of 2002 that, however, imposed a $250,000 limit on a campaign committee’s ability to repay those loans with money contributed by donors after the election.

A day before he was reelected in 2018, Cruz loaned his campaign committee $260,000, $10,000 over the limit — laying the foundation for his legal challenge to the cap. While He could have been repaid in full by campaign funds if the repayment occurred 20 days after the election. But Cruz let the 20-day deadline lapse so that he could establish grounds to bring the legal challenge.

Cruz’s lawyers told the Supreme Court in briefs that “no First Amendment right is more vital in our constitutional democracy than the freedom of a candidate to speak without legislative limit on behalf of his own candidacy.”

The law, “by substantially increasing the risk that any candidate loan will never be fully repaid — forces a candidate to think twice before making those loans in the first place,” Cruz’s brief said.

The Biden administration supported the limits, saying the Cruz loan was made with the “sole and exclusive motivation” of triggering the lawsuit.

Deputy Solicitor General Malcolm L. Stewart told the justices that the law “imposes insubstantial burdens on the financing of electoral campaigns and it targets a practice that has significant corruptive potential.”

“A post-election contributor generally knows which candidate has won the election, and post-election contributions do not further the usual purposes of donating to electoral campaigns,” he said.

Campaign finance watchdogs supported the cap, arguing it is necessary to block undue influence by special interests, particularly because the fundraising would occur once the candidate has become a sitting member of Congress.

Noting that the provision in question was a “relatively obscure one,” Dan Weiner, the director of the Elections and Government Program at the Brennan Center for Justice at NYU Law, told CNN after the ruling that “the practical implications for campaign finance laws are pretty minimal.”

“I think that the decision says a lot about the court’s broader approach to the First Amendment and the direction it’s headed,” said Weiner, whose organization filed a friend-of-the-court brief in supporting the limits in the case.

“It’s another instance that they’re going to chip away on the restraints that our system has traditionally imposed on unfettered private money in campaign,” Weiner added.

Chipping away at a 20-year-old campaign finance law

Monday’s ruling marks the latest erosion of the 2002 law — known by the names of its sponsors, the late Arizona Republican Sen. John McCain and former Wisconsin Sen. Russ Feingold, a Democrat. The law sought to limit the flow of large, unregulated and often secret money in US elections.

In recent years, however, the high court has stripped away major provisions of that law, most notably in its blockbuster 2010 Citizens United decision, which allowed corporations and unions to unleash unlimited amounts of money in races as long as they spent independently of the politicians they support.

In 2008, the justices also struck down the so-called millionaire’s amendment that aimed to level the playing field when wealthy candidates financed their own campaigns. That provision had relaxed contribution limits for opponents of self-funded candidates in an attempt to close the funding gap.

In another ruling chipping away at the McCain-Feingold law, this one in 2014, the court’s conservative majority struck down caps on how much an individual can donate in total during a single election cycle — establishing another route for big money in elections.

Against this backdrop, advocates for limits on money in politics said the Monday’s ruling was relatively narrow in scope — leaving intact some of the remaining pillars of the law, including its ban on so-called “soft-money” — or unlimited donations — to political parties.

“It’s a another blow to McCain-Feingold,” Tara Malloy, a top lawyer with the Campaign Legal Center, said of the Cruz decision. “But it seems to be more of a death by a thousand cuts instead of a body blow.”

Rick Hasen, an election law expert at the University of California-Irvine’s Law school who supports some limits on money in politics, said Monday’s opinion was a “relief” for him because it did not break significant new ground for a court that has dismantled other provisions of the law.

The justices did not establish a new standard for what amounts to political corruption or disturb the remaining limits on campaign contributions directly to candidates, he noted in a blog post.

But, he added in an email to CNN, “the Court has shown itself not to care very much about the danger of corruption, seeing protecting the First Amendment rights of big donors as more important.”

This story has been updated with additional reaction and background information.

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CNN’s Tierney Sneed contributed to this report.