The year was 2018. Ariana Grande’s Sweetener topped the charts. Avengers: Infinity War smashed records. The U.S. midterm elections were in full swing, with Republicans on the way to holding the Senate and Democrats poised to take control of the House. And the day before Sen. Ted Cruz won his reelection, he loaned his campaign $260,000 out of his own pocket.
The Texas Republican’s loan now sits at the center of a Supreme Court case that could impact the role money plays in politics and determine how candidates recoup personal funds they spent on their own races. Federal law dictates that if candidates loan money to their campaign, they can’t pay themselves back more than $250,000 using funds raised after Election Day—meaning funds from donors who know the outcome of the race. (Candidates can pay themselves back as much money as they’d like using funds raised before the election, as long as they do so within 20 days after the election.)
Cruz’s campaign paid him back $250,000, but he didn’t get that last $10,000. He and his campaign sued the Federal Election Commission (FEC), arguing that the loan repayment cap discourages candidates from loaning money to their campaigns and limits political speech, violating the First Amendment. In response, the U.S. Solicitor General argues that the cap is meant to prevent quid pro quo corruption, and that post-election donations that reimburse candidates are inherently more corrupting than other donations because they go directly into a candidate’s pocket. A district court sided with Cruz and struck down the law in June 2021. The Supreme Court will now hear the case on Jan. 19 and make the ultimate determination about whether the cap can stand.
It’s unclear if Cruz will get his $10,000 back even if he wins the case. But the results of the suit could span far beyond the Texas Senator. Progressive advocates argue that if the law is overturned, deep-pocketed donors could buy favor with elected officials by paying the candidates back for large personal campaign loans after they’re assured of the candidate’s victory. But Cruz’s allies argue that the law unduly limits political speech by financially restraining candidates from supporting their own campaigns, and stacks the deck in favor of the rich candidates who can afford to spend their own money without getting repaid.
After Donald Trump spent millions of dollars of his own fortune on his winning presidential campaign in 2016, House and Senate candidates poured a record amount of their own money into campaigns in the 2018 midterms, according to CNN. As more of America’s one percent seem poised to run for office—and spend big on their campaigns in the process—the future of the loan repayment ceiling could determine how much money they can take from people who might be hoping to curry favor with the newly elected officials.
A Cruz spokesperson tells TIME that the Senator is “confident that the Supreme Court will agree with the unanimous decision made by the three-judge District Court that this law is an unconstitutional restriction on free speech that serves merely to benefit incumbent politicians and the super wealthy.” The FEC would not comment on pending litigation, and the U.S. Department of Justice (DOJ) directed TIME to its filings in the case when asked for comment.
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Cruz admits his true goal was never the $10,000: in court filings, he said that he only made the loan in the first place so he could bring the lawsuit and overturn what he argues is an unconstitutional law. Before the district court, Cruz’s team stipulated that the “sole and exclusive motivation” behind Cruz’s actions in making the loan was to “establish a factual basis for this challenge.” The FEC says that confession should disqualify him, arguing the case represents a “self-inflicted” injury that the Court shouldn’t remedy.
As with many campaign finance cases, the suit could have broader implications than the fate of the challenged law. The Supreme Court has long held that campaign finance regulation generally doesn’t violate the First Amendment as long as it prevents quid pro quo corruption or the appearance of corruption. But what falls into those two buckets is hotly debated. If the high court’s 6-3 conservative supermajority chooses to opine on the definition of corruption or the appearance of corruption in its ruling, or how the Court should evaluate those questions, it could ripple across all sorts of campaign finance regulation.
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Miriam Becker-Cohen, appellate counsel at the progressive Constitutional Accountability Center, which filed a brief in support of the FEC, argues that giving money to a candidate after they’ve won so they can reimburse themselves “plainly gives rise to the appearance of quid pro quo corruption.” Tara Malloy, the senior director of appellate litigation and strategy at the Campaign Legal Center, which also filed a brief in support of the FEC, worries that institutional political players, including political operatives, lobbyists, and the heads of PACs, would benefit if the ceiling is struck down because “they know how valuable these post-election contributions can be.” “We know that winning candidates are much more successful raising money post-election,” she says.
The other side takes issue with the idea that post-election contributions are more corrupting than pre-election donations. The FEC draws an “analogy between repaying a loan and giving a politician a gift,” says Don Daugherty, a senior litigator at the Institute for Free Speech, which advocates against restricting political speech and filed a brief in support of Cruz. “But it’s not the same.”
Instead of corrupting elections, Cruz and his supporters argue that removing the cap would make the political process more accessible to a wider swath of candidates. Self-financing of campaigns is more common among challengers who lack the name-recognition and fundraising network of incumbents, Daugherty says, so the $250,000 repayment ceiling not only limits political speech, in his view, but also disincentivizes people from getting involved in campaigns in the first place.
“We think political activity and political speech is protected by the First Amendment, and in a democracy is inherently a good thing,” he says. “And if you’re going to restrict it, you better have a doggone good reason for doing so.”
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