Supreme Court Appears Receptive to Ted Cruz’s Lawsuit Against Campaign Finance Rule

By Matthew Vadum
Matthew Vadum
Matthew Vadum
Matthew Vadum is an award-winning investigative journalist and a recognized expert in left-wing activism.
January 19, 2022Updated: January 19, 2022

The Supreme Court was skeptical of Biden administration arguments that striking down a campaign finance rule regulating the repayment of loans by a candidate to his own campaign would open the door to bribery in elections.

The case arose after Sen. Ted Cruz (R-Texas) lent his campaign committee money and the committee deliberately failed to categorize the unrepaid part of the loan as a campaign contribution in order to launch a First Amendment-based challenge to the rule.

The appeal to the Supreme Court was brought by the Federal Election Commission (FEC) after a three-judge panel of the U.S. District Court for the District of Columbia unanimously ruled against the agency last year.

The case grows out of the 2018 election cycle that culminated in the Republican U.S. senator’s victory over Beto O’Rourke, a Democrat, by 2.6 percentage points. O’Rourke raised more than twice as much money as Cruz in the high-profile, record-breaking $115 million Senate race.

The day before the election, Cruz personally lent $260,000 to Ted Cruz for Senate, his principal campaign committee, which is $10,000 above the maximum amount that the loan-repayment provision in the Bipartisan Campaign Reform Act (BCRA) allows to be repaid with post-election contributions. The committee had $2.2 million in cash after the election but opted not to use those pre-election contributions to repay Cruz “within the 20-day deadline set by FEC regulations.” The regulations required that the $10,000 debt “be recharacterized as a contribution from Senator Cruz to his campaign,” according to an FEC brief.

Cruz and his committee acknowledge deliberately not recharacterizing the $10,000 to “establish the factual basis for this challenge.”

Cruz argues in a brief (pdfthat Section 304 of the BCRA unconstitutionally deters candidates from lending money to their campaigns by restricting the campaign’s ability to repay.

The $250,000 repayment limit “by substantially increasing the risk that any candidate loan will never be fully repaid—forces a candidate to think twice before making those loans in the first place.” As the district court found, this limit burdens a candidate’s right to speak freely in favor of his own election and “runs afoul of the First Amendment.”

“In recognition of the centrality of free speech to our democracy, the Supreme Court has consistently held that the First Amendment ‘has its fullest and most urgent application’ to speech uttered during a campaign for political office,” the district court stated (pdf). “Protections for political speech extend to campaign financing because effective speech requires spending money.”

In oral arguments before the Supreme Court on Jan. 19, Deputy Solicitor General Malcolm Stewart said Cruz and his campaign committee lacked legal standing to challenge the loan repayment limit.

Cruz’s “deliberate self-infliction of injury for no purpose other than to facilitate litigation severed the causal link between the challenged laws” and his claimed injury, Stewart said. The limit itself “imposes insubstantial burdens on the financing of electoral campaigns” and “targets a practice that has significant corruptive potential” because “a post-election contributor generally knows which candidate has won the election.”

“The conduct the statute regulates implicates the same concerns that underlie limits on gifts to federal officials,” Stewart said.

Justice Clarence Thomas said Stewart “said a number of times that self-inflicted injuries can’t be a basis for standing.” Thomas brought up the infamous 1896 Supreme Court ruling in Plessy v. Ferguson that institutionalized Jim Crow laws by finding racial segregation laws were constitutional if facilities for each race were equal in quality, a doctrine later known as “separate but equal.” The high court overturned the precedent in Brown v. Board of Education in 1954.

“What would you say about Plessy sitting in the wrong car?” Thomas asked, referring to Homer Plessy, a light-skinned man deemed to be black, who sat in a first-class train car, contrary to Louisiana law at the time. Plessy was posthumously pardoned by Louisiana Gov. John Bel Edwards two weeks ago.

Stewart replied that the government “would not say that that is self-inflicted in the relevant sense.”

Thomas retorted: “Well, why not? I mean … all he has to do is go to another car.”

Stewart said, in the Cruz case, “the plaintiffs did something they would not otherwise have done solely for the purpose of being injured and then filing a suit.”

Responding to a question from Justice Sonia Sotomayor, who participated remotely in the hearing, Stewart offered the example of someone buying a cup of hot coffee from a McDonald’s restaurant and pouring it on himself so he could sue.

“I think we’d all have the strong reaction that suit can’t go forward,” he said.

Justice Samuel Alito took issue with Stewart’s explanation of “why the repayment of this loan is a gift when the repayment of other loans is never considered a gift.”

Justice Amy Coney Barrett said Cruz “says that this doesn’t enrich him personally because he’s no better off than he was before. It’s paying a loan, not lining his pockets.”

Justice Brett Kavanaugh said a candidate may be reluctant to lend money to his campaign out of fear he wouldn’t get it back.

“That seems to be … a chill on your ability to loan your campaign money,” Kavanaugh said.

Cruz attorney Charles J. Cooper denounced the government’s arguments against standing as “meritless.”

It doesn’t “matter whether Cruz’s $10,000 injury was self-inflicted. At least since Mr. Plessy sat down in the train car reserved for whites, this court has repeatedly held that a plaintiff who deliberately subjects himself to the injury of unconstitutional government action for the admitted purpose of challenging it has created his standing, not defeated it.”

Justice Elena Kagan told Cooper the standing argument was “weird and interesting” because the regulation authorizing the limit “doesn’t seem to have all that much to do with the statute.”

“In other words, the regulation imposes its own requirement that’s separate and apart from what the statutory requirement is. And usually where we see something like that … we say, well, the regulation went beyond the bounds of the statute, that’s its own legal problem.”