Ted Cruz vs. Frankenstein’s Monster

January 18, 2022   •  By Brad Smith   •    •  ,

This piece originally appeared in The Wall Street Journal on January 18, 2022. 


When the Supreme Court upheld the constitutionality of major portions of the Federal Election Campaign Act in Buckley v. Valeo (1976), it launched what is now a nearly half-century experiment with heavy regulation of political speech and campaign financing.

At the time, this newspaper editorialized that the law “will probably act like the Frankenstein’s monster it truly is. It will be awfully hard to kill, and the more you wound it, the more havoc it will create.”

The problem with FECA, and its 2002 adjunct, the Bipartisan Campaign Reform Act, is that they regulate discussion about candidates, elections and public affairs—precisely the speech that the First Amendment intended to protect. The result is that the Supreme Court has spent years embroiled in campaign finance disputes, as this newspaper anticipated.

On Jan. 19 the justices hear the latest case, Cruz v. Federal Election Commission. In Buckley, the court upheld much of the FECA because of what it deemed to be a compelling government interest in preventing “corruption.” In Cruz, the core issue is: Is it “corruption” when an official is paid what he is legally owed?

Under FECA, a candidate can’t accept a campaign contribution from any one person exceeding $2,900, a limit that tends to benefit incumbents. Raising the money to run a political campaign in $2,900 chunks takes time—one reason that officeholders are always raising money. Incumbents usually know if they are seeking re-election the day after the election; challengers typically don’t decide to run until much closer to the election and have less time to build cash. Incumbents also usually benefit from having better name recognition and a list of supporters from past campaigns.

One type of candidate that can offset these incumbent fundraising advantages is a wealthy one, who can loan a large sum to his own campaign committee. By the early 2000s, incumbent congressmen and senators had grown nearly paranoid about the idea of facing a “self-funded” challenger.

Thus, in BCRA, Congress sought to “level the playing field”—i.e., to advantage incumbents. The so-called Millionaire’s Amendment said that if a candidate spent a lot of his own money running for office, the contribution limit for his opponent—but only his opponent—would be tripled. The apparent theory was that contributions over the limit corrupted officeholders unless they faced a strong challenger and really needed more money.

The Millionaire’s Amendment also limited the ability of a campaign committee to repay a candidate for personal loans to the campaign. Campaigns may normally raise money after an election to pay off debts, but under the amendment, they may not use funds raised after the election to repay more than $250,000 in candidate loans. As the late Sen. Harry Reid (D., Nev.) stated on the Senate floor, the amendment was “an incumbent advantage measure.”

The different campaign contribution limits, under which one candidate could accept contributions three times larger than his opponent, were struck down by the Supreme Court in 2008. But the provision on loan repayments remains, and is the issue in Cruz.

Finding the loan-repayment provision unconstitutional should be easy for the justices. The provision was clearly based on the constitutionally impermissible motivation of trying to favor certain types of candidates over others. And it’s absurd on its face. The provision doesn’t increase the limits on contributions—a donor who has already given the campaign the legal maximum can’t contribute more to help the campaign pay off the loan from the candidate. So how is an official “corrupted” when he is paid back what he is owed?

The government responds that loan repayments benefit the candidate personally, because otherwise the candidate would have to write off the debt. This is a strange notion of “loan,” but any merit this argument may have is undercut by the fact that the campaign may repay the candidate the entire amount if it uses funds raised before Election Day and repays up to $250,000 from funds raised after Election Day.

Most important, the law limits speech. Since the amendment was passed, candidate loans to their own campaigns tend to halt at $250,000—limiting a campaign’s resources and hence its speech to the public. You might think this works against wealthy candidates, but in fact it works in favor of extremely wealthy candidates, who can afford to write off large sums of money.

Oddly, given the provision intended to help incumbents, the plaintiff in this case is Sen. Ted Cruz of Texas. In his 2018 race, in which Democratic challenger Beto O’Rourke outspent him by $33 million, the incumbent Republican senator lent his campaign $260,000. Mr. Cruz won in the closest Texas Senate race in 40 years. Now his campaign is limited in its ability to repay the senator.

Although campaign finance is often described as a Wild West, in fact it is a highly regulated industry. Campaigns must rely on a select, highly specialized bar to navigate hundreds of pages of statutes, hundreds more of arcane regulations, and thousands of administrative-law decisions. This is fundamentally incompatible with a First Amendment designed to prevent government from censoring or manipulating speech about politicians, elections and public affairs. The court should do all it can to put this Frankenstein to rest.

Brad Smith

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