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

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 the 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.”

The ruling is a further erosion of a 20-year-old law that governs how elections are funded.

The Supreme Court already has chipped away at the law, granting corporations and unions the right to spend unlimited amounts to influence candidate elections in its 2010 Citizens United decision.

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 the case at hand, 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.

Federal law allows candidate to make loans to their campaign committees without limit. The Bipartisan Campaign Reform Act of 2002, however, imposes 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.

This story is breaking and will be updated.

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CNN’s Tierney Sneed contributed to this report.