Supreme Court Signals Support for Ted Cruz in Campaign-Finance Case

(Bloomberg) -- The U.S. Supreme Court signaled interest in rolling back campaign-finance restrictions, voicing skepticism about a provision regulating the repayment of candidate loans in a clash stemming from Senator Ted Cruz’s 2018 re-election campaign.

Hearing arguments in Washington, a number of the court’s conservative justices suggested they see the restriction, which the Texas Republican is challenging, as violating the speech rights of candidates and their donors. The provision says that campaigns can use money donated after the election to repay candidate loans only as much as $250,000.

Justice Brett Kavanaugh called the $250,000 cap “a chill on your ability to loan your campaign money.”

The case could add to a line of recent Supreme Court rulings striking down campaign-finance restrictions as violating the First Amendment. Most notably, the court invalidated spending limits for corporations and unions in the 2010 Citizens United ruling.

The Biden administration is defending the repayment cap, saying it helps prevent corruption by curbing donations that will personally enrich someone who has just won election.

“It targets a practice that has significant corruptive potential,” Justice Department lawyer Malcolm Stewart argued.

The Cruz campaign’s lawyer, Charles Cooper, said the restriction “creates a drag on the campaign speech, on the candidate speech.”

‘Bazillion Dollars’

Cooper’s argument drew resistance from Justice Elena Kagan, who said a candidate “can spend a bazillion dollars of his own money if he wants to.” She said the cap is “really a restriction on how a candidate can use third parties to finance his speech,” making it equivalent to the contribution limits the court has previously upheld.

But Justice Amy Coney Barrett said that “there wasn’t any evidence of actual quid pro quo corruption causing problems.” 

The prevention of quid pro quo corruption -- that is, the direct exchange of money for political favors -- is the only government interest the Supreme Court has previously said is serious enough to warrant campaign finance restrictions.

Cruz acknowledges he structured his finances so that he could challenge the provision. He loaned his campaign $260,000 the day before Election Day, when he defeated Democrat Beto O’Rourke. The campaign repaid him all but $10,000, using money that Cruz says came from post-election contributions. 

The Biden administration also says Cruz lacks legal standing to challenge the provision, in part because it’s not clear the $250,000 came from post-election contributions. The administration also says any harm Cruz suffered was self-inflicted.

The Cruz campaign had $2.38 million in pre-election funds on hand after the election, according to the government.

Congress imposed the cap as part of the 2002 Bipartisan Campaign Reform Act, a law that has repeatedly come before the Supreme Court. The court upheld the bulk of the law in 2003 but has invalidated multiple provisions over the years.

Senator Mitch McConnell, the Republican leader, is urging the court to invalidate the entire 2002 law, arguing in a friend-of-the-court brief that the court should “wipe the slate clean.” The brief was written by Don McGahn, who served as White House counsel under President Donald Trump.  

McConnell’s arguments didn’t come up during the 90-minute session Wednesday.

The case is Federal Elections Commission v. Ted Cruz for Senate, 21-12.

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