Federal law limits candidates from using more than $250,000 in contributions raised post-election to repay personal loans candidates make to their campaigns. In 2018, Sen. Ted Cruz and his Senate campaign committee sued the FEC, complaining that this law violated the First Amendment.
The U.S. Supreme Court has recognized that the risk of corruption is “inherent” in a campaign finance system that relies on private contributions to candidates. One type of contribution that raises particularly acute corruption concerns is money raised after Election Day to repay candidates’ personal loans to their campaigns.
Using post-election...
Until Sen. Cruz filed his lawsuit, FEC v. Ted Cruz for Senate, the narrow yet important provision in the Federal Election Campaign Act (FECA) that sets a modest $250,000 limit on post-election candidate loan repayments had largely operated without controversy since its adoption as part of the McCain-Feingold Act in 2002.
To set the stage for a constitutional test challenge to the loan-repayment limit, Cruz loaned his campaign $260,000 immediately before the 2018 general election, then filed suit in Washington, D.C. federal court. There, Cruz argued that the restriction limiting candidates from using more than $250,000 in post-election contributions to repay personal loans violates the First Amendment.
In June 2021, the three-judge court agreed, reasoning that the federal government had not provided an adequate anti-corruption justification for the limit and striking it down as unconstitutional.
The case now heads to the U.S. Supreme Court under a special review provision that provides for direct appeal to the Supreme Court in constitutional challenges to the McCain-Feingold law.
On Aug. 6, 2021, Campaign Legal Center (CLC) filed an amicus brief in the case, defending the law and urging the Supreme Court to reverse the lower court. The next month, the Court set the appeal for plenary briefing and oral argument, which is now scheduled for Jan. 19, 2022. On Nov. 22, 2021, CLC, joined by Citizens for Responsibility and Ethics in Washington (CREW), Common Cause and Democracy 21, filed a second amicus brief during the merits phase of the appeal, again urging the Court to reverse the ruling below.
What’s At Stake:
Federal law does not limit how much candidates can spend on their own campaigns nor how much they can loan to their own campaign committees. FECA, in fact, gives wide berth to the possibility that candidates may choose to self-finance — an activity accorded First Amendment protection.
The only thing the challenged law limits is using more than $250,000 in contributions solicited after an election to repay candidate loans. This form of payment comes with a self-evident and acute risk of corruption—because, unlike contributions raised in the normal course of an election cycle to facilitate campaign messaging, funds raised post-election to repay a candidate loan essentially flow right back into the candidate’s pocket for his or her personal use.
Post-election loan repayment contributions are therefore more accurately viewed as “gifts”— raising all the same corruption risks as would a candidate’s or officeholder’s acceptance of other direct financial benefits. The risk of corruption posed by what is functionally a personal “gift” to a candidate is clear. A donor, possibly one with business before a committee the candidate sits on, is essentially giving that candidate a personal check.
The Supreme Court now has the opportunity to restore an important anti-corruption measure that serves as a modest and commonsensical limit on how much candidates can repay themselves after Election Day for personal loans to their campaigns.
