Supreme Court signals it may side with Sen. Ted Cruz in challenge to campaign finance rules

WASHINGTON – The Supreme Court hinted Wednesday it may side with Sen. Ted Cruz and rule that a federal law violates the First Amendment because, in the name of curbing corruption, it limits how candidates are repaid when they lend to their own campaign. 

Cruz, a Texas Republican and 2016 presidential candidate, challenged a provision of a campaign finance law signed by President George W. Bush in 2002 that governs when and how campaigns may repay candidates for loans above $250,000.

While the provision itself appears to be rarely invoked, advocates said the nation’s highest court could use the case to take another whack at campaign finance rules intended to limit money flowing into federal elections. The Supreme Court since 1976 has viewed campaign spending as a form of speech.  

"The choice is to spend that without any possibility of getting it back or not spending it at all," said Associate Justice Brett Kavanaugh. "And that seems to be, therefore, a chill on your ability to loan your campaign money."   

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At issue are federal requirements governing how campaigns repay loans from a candidate in excess of $250,000. Any amount over that threshold has to be repaid within 20 days after the election or it converts to a donation, meaning the candidate can't recover it. A campaign is prohibited from repaying any amount above $250,000 from post-election contributions.

If campaigns can't repay that money with contributions made before the election, the candidate has to take the loss.

The court's liberal justices pushed back on the notion that Congress is unable to impose limits on candidate loans. After all, Associate Justice Elena Kagan repeatedly noted, federal law already limits to $2,900 how much donors may give to individual campaigns. If the government can do that for contributions, why not for candidate loans?      

"Why isn’t it completely identical to campaign limits?" Kagan asked. 

The law, she said, "just limits the amount of speech that a candidate can make on somebody else's dime. It does not limit the amount of speech that a candidate can make on his own dime."

A day before his successful reelection in 2018, Cruz loaned his own campaign $260,000. When the deadline came to repay the money, his campaign didn't reimburse him for the last $10,000, allowing him to challenge the law. One thing both the conservative and liberal justices seemed to agree on Wednesday: That Cruz has the standing to bring the lawsuit in the first place. The Biden administration argued Cruz suffered from self-inflicted harm and therefore wasn't entitled to file his lawsuit. 

Supporters of tighter controls on campaign finance say post-election contributions to help repay a candidate’s loan would essentially put those donations directly in the politician's pocket, increasing the risk of corruption.

Associate Justice Amy Coney Barrett was among several justices questioning that argument, suggesting the candidate is "repaying a loan" and "not lining his pockets."

"Senator Cruz says that this doesn't enrich him personally because he's no better off than he was before," Barrett said.

Opponents say the rules make it harder for first-time candidates to take on better-funded incumbents.

Some opponents, including Senate Minority Leader Mitch McConnell, R-Ky., have asked the court to use the case to strike down the Bipartisan Campaign Reform Act in its entirety. That law also set new limits on political donations in federal elections and tried to quash "soft money" that skirted those limits.

The Supreme Court has issued major decisions in recent years rolling back federal campaign finance rules, including a 2010 ruling that permitted outside groups to spend unlimited money in elections. Another decision four years later lifted caps on how much individuals may give to all candidates and committees during an election cycle.

A special three-judge panel unanimously sided with Cruz last summer. The panel, which included one judge nominated by a Democratic president and two nominated by a Republican, ruled the government failed to demonstrate that the prohibitions prevented quid pro quo corruption.