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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.