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How Ted Cruz engineered a Supreme Court case to recoup a half-million dollars.

Supreme Court cases typically reflect a broader dispute in law or politics. Seemingly small stakes may obscure deeper principles that sound in the great traditions of constitutional democracy. With each case, the justices strive to establish stable and uniform law upon which government and citizenry alike can rely rather than merely seeking to settle one particular controversy.

Not Federal Election Commission v. Ted Cruz for Senate, though. This fetid case is about exactly one thing: whether the Supreme Court will enrich Ted Cruz by more than half a million dollars. After oral arguments on Wednesday, it appears exceedingly likely that the Republican-appointed supermajority will hand Cruz a windfall. The bigger question is how much damage they do to the remaining husk of campaign finance law in the process.

Cruz for Senate challenges a federal law that regulates candidates’ loans to their own campaigns for Congress. Politicians can lend an unlimited amount of money to their campaign, an act that the Supreme Court deems “political speech.” Many candidates, predictably, wind up deep in debt to their campaigns. They are free to pay off this debt with money raised before the election—as long as they do so within 20 days of Election Day. But under the McCain–Feingold Act, they can pay off only $250,000 of debt with money raised after the election.

Congress enacted this provision because without it, politicians can exploit a loophole for personal gain. When donors contribute money before an election, federal law requires its use on genuine campaign activities. That’s one reason why the Supreme Court considers political contributions to be “speech”—they must, in theory, be used for expressive purposes. But when donors contribute money after an election to help the candidate repay a campaign loan, that cash goes straight to the politician. Wealthy benefactors can therefore furnish post-election donations as a kind of legal bribery, lining a candidate’s pockets rather than filling his campaign’s coffers. As Ian Millhiser explained in Vox, politicians can actually make a profit by charging extortionist interest rates on personal loans. Democratic Rep. Grace Napolitano did exactly that before Congress cracked down on this stratagem, netting $72,000 in interest on a $150,000 loan.

Post-election contributions are fundamentally different from those made during the race. The Supreme Court has said that Congress may only regulate campaign contributions to prevent “quid pro quo corruption” or its “appearance.” And donating to the winner after his victory can look pretty corrupt. As the Justice Department put it, a post-election donor “usually will know whether the recipient of the contribution has prevailed in the election” and “will be in a position to do him official favors.” It’s this difference “between a bet and a bet on a sure thing” that amplifies the risk of corruption.

The cap on loan repayment irks some lawmakers who give their campaigns an infusion of capital to get across the finish line. One such lawmaker is Cruz, who, in 2012, was locked in a tight Senate primary. To clinch the race, Cruz loaned his campaign more than $1 million. He won, but due to the repayment cap, he has never recouped $545,000 of that loan. So, in 2018, Cruz hatched a scheme to kill this cap and collect the outstanding payment: One day before the general election, he lent his campaign $260,000—which is, of course, $10,000 more than he could recoup with post-election donations.

After the race, Cruz’s campaign still had $2.38 million in pre-election donations on hand. He could have paid off the loan with those funds immediately. For the sole purpose of teeing up a court battle, however, he refused. Instead, Cruz filed a lawsuit alleging that he had a First Amendment right to pay off the extra $10,000 with post-election contributions. The $250,000 cap, he claimed, unconstitutionally infringed on his freedom of speech. (Cruz has acknowledged that he manufactured the case.)

Cruz has acknowledged that he manufactured the case.

A lower court agreed and struck down the cap on First Amendment grounds. The dispute might have ended there, but surprisingly, the GOP-controlled FEC voted to appeal the decision. In another demonstration of the case’s political currents, the FEC’s Republican commissioners voted in favor of the appeal—even though they are hostile to the cap. Seth Nesin, a former FEC attorney who litigated the case, told me he believed the Republican commissioners sought an appeal because “ideologically they would like the law to be struck down” by the Supreme Court. These commissioners wanted to give SCOTUS another chance to hobble McCain–Feingold, a bête noire of the conservative legal movement. They also knew that the Supreme Court would have to hear the case due to a quirk in federal law.

Their gamble will probably pay off. On Wednesday, all six Republican-appointed justices sounded prepared to strike down the cap, framing it as an unconscionable restriction of political speech. Justice Clarence Thomas compared it to a hypothetical law barring “certain media outlets” with “an outsized influence on an election” from spending too much money “on editorials.” Justice Brett Kavanaugh complained that the cap “is designed for, or has the effect of, incumbency protection.” Justice Amy Coney Barrett scorned the government’s assertion that paying off someone else’s loan qualifies as a “gift.” (“He’s no better off than he was before!”) Justice Neil Gorsuch didn’t speak, but despises all campaign finance regulations.

The biggest wrinkle came in the form of a compromise that Justice Elena Kagan floated: What if, she wondered, the court invalidated the regulation that gives candidates only 20 days to pay off campaign loans with pre-election funds? That rule, she pointed out, appears nowhere in the actual statute. As Chief Justice John Roberts noted, “it’s only the regulation that imposes the injury” on Cruz; without it, he could use pre-election contributions to balance the ledger. Fortunately for Cruz, Alito shot down the idea in a sharp exchange with Kagan and Roberts, dismissing it as “not the issue in the case.” If a majority did adopt this middle ground, Cruz could recover only the $10,000 he teed up as a test case, not the $545,000 that he really wants back. A cynic might wonder if the hard-right justices want him to get the full windfall.

Lingering in the background of Cruz for Senate is a difficult question: Does this case actually matter to anyone besides Ted Cruz? Previous assaults on McCain–Feingold like Citizens United opened the floodgates to massive election spending. This one might not. “It’s entirely possible that it would be used as a loophole,” Nesin told me. But if so, it would be a rather ineffective one. Under current law, candidates could receive only $2900 from individuals and $5,000 from political action committees. In Congress today, influence typically costs more than $7900. And there are other, wider loopholes that plutocrats can exploit to buy lawmakers.

Which brings us back to where we started: the stench of this case. The court’s decision will enrich one particular politician who has spent years lining up the dominoes so they would fall exactly how he wants. Cruz voted to confirm three sitting justices, all of whom are about to rule in his favor, each of whom won their seats with help from an elaborate dark money machine. The justices’ eventual decision will rest on an aggressively deregulatory interpretation of the First Amendment that aligns perfectly with the Republican Party’s platform. This court has long insisted that there is nothing inherently corrupt about government officials doing the bidding of their most generous benefactors. That argument looks increasingly self-serving.

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