Supreme Court appears divided over Cruz campaign finance challenge

A divided Supreme Court on Wednesday grappled with Sen. Ted Cruz’s (R-Texas) challenge to limits on the amount of money candidates can raise from donors to pay off their personal debt after an election.

The questions posed during an hour-long oral argument did not clearly telegraph an outcome. But the justices seemed to split along familiar ideological lines in the highest-profile campaign finance dispute to reach the 6-3 conservative majority court, with at least four of the court’s more conservative members appearing receptive to Cruz’s challenge.

At issue is whether a section of the 2002 Bipartisan Campaign Reform Act violates the First Amendment by setting a $250,000 cap on the amount of post-election funds a candidate can be repaid for personal loans they made to their campaign. 

The dispute arose after Cruz put $260,000 of his own money into his 2018 reelection campaign. The following year, as he sought to pay off his debt in excess of the federal limit, Cruz sued the Federal Election Commission (FEC), teeing up a constitutional challenge to the law.

Charles Cooper, a lawyer for Cruz, told the justices that the repayment limit chills candidates’ free speech rights by making them less likely to take out personal loans that would help their campaigns get their message out.

He also argued that post-election donations to candidates don’t create any more risk for corruption than ordinary campaign donations.

Justice Elena Kagan disputed the latter point, arguing that donations to repay a candidate’s personal debt effectively amount to direct payments to the candidate. 

“I mean, the entire point of this law is that we start getting worried when people start repaying the candidate’s indebtedness, because that’s just another way of putting money in his pocket,” Kagan said, later adding that donations that come after the candidate wins their election could have a particularly corrupting effect on the officeholder. 

Cooper argued that if those donations were so corrupting, Congress would not have allowed the $250,000 limit in the first place. He said that the rule only serves to protect incumbent lawmakers from challengers who might loan their campaigns more money if not for the limit. 

That argument drew criticism from Justice Stephen Breyer, who reiterated the government’s argument that Congress has the right to balance competing interests of preventing corruption and allowing candidates to get their campaigns off the ground with the help of personal loans.

The court’s liberal justices disputed Cooper’s claim that donations to repay personal loans — capped at $2,900 for the current election cycle — are not personal gifts to the candidate, while the court’s more conservative justices backed his argument. 

Campaign finance experts see the case as a key battle over the future of campaign finance laws. If justices side with Cruz’s argument that unlimited personal loan repayments do not embolden quid pro quo corruption, it could signal the court’s willingness to strike down other campaign finance restrictions that are underpinned by the anti-corruption justification.

The court has steadily chipped away at the 2002 campaign finance law in question, striking down its provision to limit the power of wealthy self-funding candidates, a ban on corporate political spending and limits on the amount of money a donor can give in each election cycle. 

Much of Wednesday’s argument focused on fairly technical questions, like whether Cruz has the legal right to sue, and whether it was appropriate for his lawsuit to center on an alleged violation of constitutional rights rather than some less sweeping legal theory. 

Malcolm Stewart, a Justice Department lawyer who argued on behalf of the FEC, said the court should turn away what he characterized as Cruz’s “self-inflicted” and “manufactured” legal injury. He likened Cruz’s strategy to that of a plaintiff who buys hot McDonald’s coffee and intentionally pours it on themselves to lay the groundwork for a lucrative lawsuit.

“That deliberate self-infliction of an injury, for no purpose other than to facilitate litigation, severed the causal link between the challenged laws and Senator Cruz’s injury,” Stewart said.

But at least four of the justices appeared skeptical that Cruz lacked the standing to sue in federal court. 

“I do have difficulty understanding this ‘manufacture’ business because he wasn’t precluded from contributing to his campaign, so he could,” Justice Sonia Sotomayor told Stewart. “He was only precluded from repaying it from certain funds. And so I don’t know that this is a manufactured injury as such.” 

At the same time, however, several justices seemed receptive to the Justice Department’s suggestion that Cruz’s effort to strike down the federal law was somewhat ill-conceived, given that a more modest challenge to how the FEC applied the law would afford him the same practical outcome.

Last summer, Cruz prevailed on his constitutional claim in a Washington, D.C., federal court, where a three-judge panel ruled that the 2002 statute violated his free speech rights. The FEC’s appeal to the Supreme Court followed.

A decision in the case, FEC v. Ted Cruz for Senate, is expected by this summer.