Ted Cruz wants the Court to kill an important anti-corruption law.
The case concerns federal campaign finance laws, and, specifically, candidates’ ability to loan money to their campaigns. Candidates can do so — but in 2001, Congress enacted a provision that helps prevent such loans from becoming a vehicle to bribe candidates who go on to be elected officials. Under this provision, a campaign that receives such a loan may not repay more than $250,000 worth of the loan using funds raised after the election.
When a campaign receives a pre-election donation, that donation is typically subject to strict rules preventing it from being spent to enrich the candidate. After the election has occurred, however, donors who give money to help pay off a loan from the candidate effectively funnel that money straight to the candidate — who by that point could be a powerful elected official.
A lawmaker with sufficiently clever accountants, moreover, could effectively structure such a loan to allow lobbyists and other donors to help the lawmaker directly profit from it. According to the Los Angeles Times, for example, in 1998, Rep. Grace Napolitano (D-CA) made a $150,000 loan to her campaign at 18 percent interest (though she later reduced that interest rate to 10 percent). As of 2009, Napolitano reportedly raised $221,780 to repay that loan — $158,000 of which was classified as “interest.”
So in 11 years, the loan reportedly earned Napolitano nearly $72,000 in profits.
And that brings us back to the Ted Cruz for Senate lawsuit. Sen. Ted Cruz (R-TX) wants the Supreme Court to strike down the limit on loan repayments to federal candidates. That decision could potentially enable any lawmaker to make a high-dollar, high-interest loan to their campaign, and then use that loan as a vehicle to funnel donations directly into their pocket. (Pre-2001 FEC rulings permitted candidates to make loans to their campaign at “a ‘commercially reasonable rate’ of interest,” but that apparently did not stop Napolitano from making a loan at a double-digit interest rate.)
And even if lawmakers do not enrich themselves by making high-interest loans to their campaign, the fact remains that every dollar a campaign donor gives to help a campaign pay back a loan from the candidate goes straight into that candidate’s pocket. As the Justice Department argues in its brief defending against Cruz’s lawsuit, “a contribution that adds to a candidate’s personal assets (and that can accordingly be used for personal purposes) poses a far greater threat of corruption than a payment that merely adds to a campaign’s treasury (and that can accordingly be used only for campaign purposes).”
Cruz claims that permitting such contributions is necessary to protect “the rights of candidates and their campaign committees to make constitutionally protected decisions about when and how much to speak during an election.”
While a decision in Cruz’s favor could effectively make it legal for wealthy donors to bribe lawmakers, Cruz has a very good chance of prevailing in a Supreme Court where Republicans control six of the Court’s nine seats.
Although current precedents nominally permit Congress to enact campaign finance laws to prevent “corruption and the appearance of corruption,” the Court’s decision in Citizens United v. FEC (2010) defined the word “corruption” so narrowly that it is basically meaningless. And the current Court is significantly more conservative than the one that handed down Citizens United a dozen years ago.
Justice Brett Kavanaugh, for example, suggested in a 2002 email that he wrote while he was a White House official that there are “some constitutional problems” with laws placing a cap on how much an individual donor can give to a candidate — something that even decisions like Citizens United permit.
Similarly, just last July, the Supreme Court voted along party lines to block a California rule requiring certain political donors to be disclosed, and it did so despite the fact that Citizens United explicitly held that disclosure laws stand on strong constitutional footing.
There is a very real chance, in other words, that a Supreme Court hostile to campaign finance regulation will join Cruz’s crusade. And if the Court does so, that could effectively make it legal to bribe many members of Congress.
Ted Cruz manufactured a fake dispute in order to bring this lawsuit
Cruz admits that he engineered this lawsuit specifically so he can challenge the restriction on loan repayments.
According to the Justice Department, on the day before the 2018 election, Cruz lent his campaign $260,000, or $10,000 more than the amount that can legally be repaid from post-election funds. Moreover, while a federal regulation permits Cruz’s campaign to pay back all of that money using funds raised before the election, so long as it did so no later than 20 days after the election, the campaign waited until after this deadline had passed to pay back $250,000 of the $260,000 loan.
And, just in case there’s any doubt why Cruz and his campaign entered into this unusual arrangement, Cruz and his campaign do not contest that “the sole and exclusive motivation behind Senator Cruz’ actions in making the 2018 loan and the committee’s actions in waiting to repay them was to establish the factual basis for this challenge.” Cruz was essentially willing to risk $10,000 of his own money for an opportunity to knock down a federal anti-corruption law.
The Justice Department, for what it’s worth, argues that these machinations should doom his suit, citing Supreme Court cases establishing that plaintiffs may not use federal courts to remedy “self-inflicted injuries” — though, as Cruz’s lawyers note in their brief, it is common for civil rights plaintiffs to use similar tactics to engineer lawsuits challenging race discrimination, and the Court has permitted such tactics in the past. So it is far from clear that Cruz is not allowed to bring this suit.
And even if the Court were to dismiss Cruz’s suit, it is likely that some other candidate would make a legitimate loan to their campaign, and then bring a similar lawsuit.
So, in other words, even if the Court decided to avoid the issues presented by this case and to dismiss Cruz’s suit, that decision would only likely delay the inevitable.
The Supreme Court enables corruption by defining the word “corruption” narrowly
The Supreme Court established in Buckley v. Valeo (1976) that lawmakers may enact campaign finance regulations that mitigate “the danger of corruption and the appearance of corruption.” Yet, while Citizens United purported to leave this aspect of Buckley in place, it severely curtailed the government’s ability to fight “corruption” by defining that word very narrowly.
Specifically, Citizens United held that federal and state campaign finance laws may only target “quid pro quo” arrangements, where money is offered in return for “political favors.” After Citizens United, Congress may still ban donors from explicitly promising to write a lawmaker a check if that lawmaker changes their vote on a pending bill. But other forms of corruption are protected by the Supreme Court’s understanding of the Constitution.
Indeed, Justice Kennedy’s opinion in Citizens United framed influence-buying by donors as an affirmative good:
Favoritism and influence are not . . . avoidable in representative politics. It is in the nature of an elected representative to favor certain policies, and, by necessary corollary, to favor the voters and contributors who support those policies. It is well understood that a substantial and legitimate reason, if not the only reason, to cast a vote for, or to make a contribution to, one candidate over another is that the candidate will respond by producing those political outcomes the supporter favors. Democracy is premised on responsiveness.
If you accept the legitimacy of this reasoning, then Cruz has a strong case. Sure, striking down the restrictions on repaying loans from candidates would allow lobbyists and wealthy donors to put money directly into the pockets of lawmakers. But, under the definition of “corruption” advanced by Citizens United, it’s not entirely clear why lawmakers may not charge lobbyists $1,000 an hour for their time — so long as the lawmakers and the lobbyist do not reach an explicit quid pro quo agreement regarding some policy matter before Congress.
If the Court does want to establish that elected officials may not rely on Citizens United to personally enrich themselves, Ted Cruz for Senate gives the Court a perfect opportunity to do so. The Justice Department argues that the Court should uphold the loan repayment provision challenged by Cruz because it enables personal donations to lawmakers that are different in kind from the ones imagined by the Court’s earlier campaign finance cases.
“When a campaign uses a contribution to fund routine campaign activities, the contribution helps the candidate by marginally improving his chance of victory, but it does not add to the candidate’s personal wealth,” the Justice Department argues in its brief. “But when a campaign uses a contribution to repay the candidate’s loan, every dollar given by the contributor ultimately goes into the candidate’s pocket.”
The Justice Department also cites a list of existing ethical rules, including a congressional rule forbidding members of the House and Senate from accepting gifts of more than $50, which prevents federal officials from using their office to enrich themselves. And it notes that the Constitution itself recognizes the danger of federal officials accepting personal gifts, forbidding them from accepting “any present, emolument, office, or title, of any kind whatever, from any king, prince, or foreign state.” (Though, in fairness, the courts didn’t exactly enforce this provision with any kind of rigor when Donald Trump was president.)
Thus far, however, the Roberts Court has shown little inclination to rein in the power of wealthy donors to shape elections — or to spend money in order to maximize their influence over lawmakers. Perhaps the Court will decide in Ted Cruz for Senate that putting money directly into a Congress member’s pocket goes too far.
But, given the Court’s record, I wouldn’t bet on it.