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Analysis

Campaign Finance Returns to Supreme Court in Ted Cruz Case

The lawsuit brought by Sen. Ted Cruz aims to dismantle federal anti-corruption rules.

January 13, 2022
Outside view of Supreme Court, daytime
Barry Winiker

The Supreme Court will hear oral arguments this Wednesday in a case that marks the latest attempt to dismantle federal campaign finance rules. The case, Federal Election Commission v. Ted Cruz for Senate, challenges a statutory limit on how much candidates can raise after an election to recoup money they loaned to their own campaigns.

This hearing will come just two days shy of the twelfth anniversary of the Court’s Citizens United decision, which enabled corporations and other outside groups to spend unlimited funds on elections. And similar to Citizens United, the Court’s decision in this case could have legal implications well beyond the specific provision being challenged, though perhaps not in the way the plaintiffs who brought it expect. The Brennan Center and counsel from Allen & Overy filed a friend-of-the-court brief urging the justices to uphold the limit.

The provision in question is Section 304 of the Bipartisan Campaign Reform Act of 2002 (a.k.a. McCain–Feingold), which limits the amount a candidate can raise after an election to repay money they spent on their campaign to $250,000.

The limit is a straightforward anti-corruption measure. The Supreme Court has held that candidates have the right to spend as much of their own money as they want to get elected — wealthy self-funders often tout their lack of reliance on donors as proof that they are incorruptible (an argument the Court itself has echoed). But fundraising after an election to recoup personal funds turns this argument on its head: Instead of being independent from donors, a winning candidate — now an elected official — is raising money that will go directly into the official’s own pocket. The corruption risk is obvious.

Of course, under the Supreme Court’s current jurisprudence, the government’s interest in preventing corruption has to be balanced against candidates’ First Amendment rights. Whether the Court has drawn the balance correctly in past cases in a subject of heated controversy. But that is all beside the point here, where the burden on speech and expression is indisputably negligible. According to FEC data highlighted in the Brennan Center’s brief, since 2002 the vast majority of House and Senate candidates (approximately 97 percent) loaned their campaigns less than $250,000, so Section 304 would not impact them. Most of the rest significantly exceeded the limit, suggesting it wasn’t much of a factor in their spending decisions.

Even Senator Cruz does not appear to have been burdened. He admitted that he only loaned his 2018 senatorial campaign an extra $10,000 over the $250,000 limit to “establish the factual basis” for his ongoing legal challenge. Overall, his campaign raised and spent more than $38 million in his successful 2018 reelection bid. The law clearly didn’t inhibit him from getting his message across to voters.

Despite this reality, a three-judge federal district court panel struck down Section 304 in June 2021 as an impermissible restriction on candidate speech. The court emphasized that over the past two decades, a tiny number of candidate self-loans — corresponding to 0.3 percent of House and Senate candidates — have “clustered” at exactly $250,000, which the lower court took as proof that Section 304 is impacting candidate behavior. But what the court did not say is that there is actually more “clustering” of loans at other round numbers like $50,000 and $100,000.

The lower court also faulted the limit for applying to losing as well as winning candidates — who presumably would have much less ability to solicit campaign donations in exchange for government favors — but made no effort to tailor its ruling to this concern, instead striking down the law for everyone.

So which way will the Supreme Court go? Given the Court’s recent trajectory on these issues, conventional wisdom would suggest that it will affirm the lower court’s ruling. On the other hand, the procedural posture of this case is unusual. Because it was decided by a special three-judge trial court authorized by McCain–Feingold, the Supreme Court had to take it, but if the Court had agreed with the lower court’s decision it could have summarily affirmed or issued a short opinion without argument. The fact that the justices set the case for full briefing and argument suggests there may be some daylight between their views and those of the trial court. And while opponents of campaign finance regulation still have reason to hope that the Court will continue chipping away at the law, the prospect that it will use this case to sweep away the remainder of McCain-Feingold (as one brief filed on behalf of Senate GOP leader Mitch McConnell urged) remains far-fetched.

Regardless of the Court’s decision, the broader question is how much longer Congress will continue ceding the development of campaign finance law to the judiciary, whose preoccupations in this area tend not to be shared by the broader public.

In fact, the historic voting rights package the Senate has begun debating, the Freedom to Vote: John R. Lewis Act, includes much-needed campaign finance changes. These would respond to the Court’s incremental deconstruction of federal campaign finance law, whose consequences include the proliferation of “dark money” from undisclosed sources, loopholes that permit foreign spending on U.S. campaigns, and rampant spending to evade remaining candidate contribution limits. By addressing these issues, Congress can respond to the real concerns Americans have about the role of money in politics and the broader health of our democracy.