Supreme Court strikes down repayment limits on candidate loans


Mud produces investigative journalism on lobbying and money in politics. The American Perspective repost this article.

The Supreme Court ruled this week to strike down a 20-year-old provision of federal campaign finance law and allow candidates to personally pocket unlimited amounts from private donors to repay themselves the money they lent to their campaigns.

Since 2002, federal law has prohibited candidates from reimbursing themselves more than $250,000 per election from their campaigns with funds they raise after their election date. Regulations promulgated by the Federal Election Commission (FEC) under this law, the commonly known McCain-Feingold Bipartisan Campaign Reform Act, allowed candidates to repay portions of loans over $250,000 with funds pre-election within 20 days of the election, but any amount not reimbursed in this window was to be treated as a campaign donation that could not be reimbursed later.

The Supreme Court decision striking down those rules came in a case brought against the FEC by Sen. Ted Cruz. In 2021, the DC Circuit Court had sided with Cruz in determining that the limit “burdens political speech and therefore implicates First Amendment protection”, and the Supreme Court, in a 6-3 decision written by Judge in chief John Roberts, agreed .

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“Limiting Loan Repayment restricts First Amendment rights by burdening candidates who wish to incur expenses in the name of their own candidacy through personal loans,” Roberts wrote. “This burden is no small feat. Debt is a ubiquitous tool for campaign finance, especially for new candidates and challengers. By preventing a candidate from using this critical source of campaign finance, Section 304 removes a barrier to entry, thereby reducing political discourse.

Proponents of campaign finance regulation, however, believe that the decision increases the risk of corruption and that the Court was therefore able, based on its precedents, to rule in favor of the restriction of political speech in this case.

“There is ample evidence across the country that post-election contributions can give rise to real and apparent corruption,” said Campaign Legal Center President Trevor Potter, a former FEC commissioner. “This decision not only contradicts the Supreme Court’s longstanding recognition that putting money in the pockets of candidates creates an inherent risk of corruption, but also common sense and historical experience.”

Common cause, who joined a amicus brief submitted in the case with Campaign Legal Center and other groups, also criticized the court’s action.

“[The] This decision creates a ballgame that will only serve to further undermine public confidence in its elected officials,” said group president Karen Hobert Flynn. “These loans could run into the millions of dollars and voters will now only know who funded a candidate’s campaign after the election.”

So far this election cycle, 1,483 campaign loans have been issued for House and Senate races, according to FEC data. Sixty-four candidates have loaned their campaigns more than $250,000 and 19 have made loans totaling $1 million or more.

The largest campaign loans reported to the FEC so far this cycle have been made by the two Republican primary candidates for the Pennsylvania Senate seat vacated by Sen. Pat Toomey, Dave McCormick and Mehmet Oz, who are currently in tied in the final. ballots are tabulated after Tuesday’s election. McCormick, a former hedge fund CEO with a net worth of at least $116 million, loaned his campaign $14.7 million, while Oz, a TV personality with a net worth of at minus $100 million, loaned his campaign $12.7 million.

In her dissent, Supreme Court Justice Elana Kagan lambasted the majority’s decision as greenlighting “every sordid market that Congress has seen fit to shut down” in the 2022 law.

The Court said in its decision that campaign loans are a particularly useful tool for non-incumbent candidates, and that appears to be the case based on loan data from the 2022 cycle. Of the top 20 campaign candidates in terms of amount for this election cycle, only 2 are currently members of Congress. This bias in the use of campaign loans in favor of new candidates and challengers was one of the reasons given by the Court to justify that it should rule on the matter rather than defer to Congress. “Given the scant evidence of corruption, deference to Congress would be particularly inappropriate where, as here, the legislative act may have been an effort to ‘isolate[ ] lawmakers of effective electoral contestation,” Roberts wrote.

While wealthy candidates who loan campaign money or take out bank loans may benefit from the Supreme Court’s ruling, many candidates may not have access to those funds. The median net worth of congressional incumbents is over $1 millionwell above the average of $121,000 for all US households in 2019.

In her dissent, Supreme Court Justice Elana Kagan lambasted the majority’s decision as greenlighting “every sordid market that Congress has seen fit to shut down” in the 2022 law.

“The majority say that Article 304 [of McCain-Feingold] violates the candidate’s First Amendment rights by interfering with his ability to “self-fund” his campaign,” Kagan wrote. “But the candidate can actually self-fund as much as they want. The law only hinders his ability to use other people’s money to fund his campaign, much like standard (and allowed) contribution limits do.


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