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SCOTUS Must Reject Ted Cruz’s Campaign Loan Repayment Request

Jan. 28, 2022, 9:00 AM

The latest in a long line of money-in-politics cases is now before the U.S. Supreme Court.

In Federal Election Commission v. Ted Cruz for Senate, the court will address whether Congress can limit the amount of campaign contributions a candidate may accept and use after an election to repay loans the candidate personally made to their campaign. The court heard arguments on Jan. 19.

It’s difficult to imagine an area of campaign finance regulation that targets a more corrupting category of political contributions. Indeed, even Sen. Mitch McConnell (R-Ky.) has called the practice of accepting post-election money to repay personal debts “an unethical practice of shaking down special interests.”

Yet a D.C. District Court panel in June invalidated the law as an unconstitutional burden on speech. The Supreme Court must now correct that error.

Congress passed the campaign finance regulation at issue, known as the “repayment limit,” as part of the Bipartisan Campaign Reform Act of 2002 (BCRA) to combat a particularly pernicious form of campaign spending. Candidates for public office often make personal loans to their campaigns in the lead up to an election.

But many campaigns are unable to repay the candidate from the campaign’s own coffers by Election Day. This can leave candidates scrambling in the wake of an election to raise funds for the sole purpose of recovering their personal loans.

Challenging the Constitutionality of the Cap

Congress recognized the corruptive risk of this kind of exchange when it passed BCRA, limiting candidate’s use of these funds for loan repayment to $250,000 to prevent the most egregious abuses of post-election fundraising. Sen. Ted Cruz (R-Texas) is challenging the constitutionality of that $250,000 cap.

Congress has long understood that the risk of corruption in the post-election fundraising context is substantial. There are several legitimate reasons donors typically make campaign contributions: to facilitate political speech, to express symbolic support for a candidate, and to increase the chances that a particular candidate will win. None apply to post-election loan repayments.

For starters, loan repayments go directly to a candidate’s pocket, not to fund more speech. What’s more, there is minimal symbolic expression because the campaign has already concluded. Last and most obviously, the funds cannot help the candidate win because the election is over.

Instead, the motivation for making post-election contributions is likely more questionable: the expectation of political favors in return. It is no surprise, then, that winning campaigns radically out-raise losing campaigns in which candidates “don’t legislate” after an election.

From this standpoint, the repayment limit operates as the functional equivalent of the many gift rules to which officeholders at all levels of government are bound. The Senate, House, Judiciary, and Executive Branch each limit the value of gifts their members may accept to $50 or less.

These gift limits unquestionably combat corruption. The repayment limit is functionally the same. Like any other gift of value, a contribution made solely to satisfy a candidate’s outstanding loans flows directly to the candidate’s pocket and personally enriches the candidate. Limiting these cash payments works in concert with officeholder gift limits as a critical safeguard to the responsiveness of democratic government.

Absence of Limits Leads to Foul Play

In the absence of such rules, for example in states and localities that lack analogs to BCRA’s federal limit, foul play proliferates. In Alaska, Gov. Bill Sheffield (D) became the subject of an impeachment inquiry after he steered a $9 million contract to a group that included a lobbyist who helped raise $92,000 to repay Sheffield’s campaign debt.

Similar concerns arose in Oklahoma after Gov. Brad Henry (D) appointed his post-election donors to become secretary of state and other high-ranking positions. Likewise, city council members in San Diego triggered ethics concerns when they cast decisive votes in favor of lobbyists who raised funds to retire those council members’ campaign debts.

And these examples are borne out more broadly by empirical evidence: Officeholders who depend upon post-election contributions to retire personal loans are particularly responsive to those contributions in legislative decision-making.

All told, campaign contributions made after an election pose an acute risk of corruption—and do nothing to advance political speech. As McConnell has suggested, and the amicus brief of good government groups Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, and Democracy 21 explains, this is an area where the need for campaign finance regulation is especially pressing. The Court must let this commonsense measure stand.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Orion de Nevers is a legal fellow at Campaign Legal Center where he litigates campaign finance cases at all levels of the federal courts. His legal commentary appears in Slate, the National Law Journal, and a variety of other outlets.