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Sen. Ted Cruz prevails in campaign finance lawsuit

Decision likely to benefit candidates who self-fund their campaigns

Sen. Ted Cruz, R-Texas, warns the photographer about the end of the escalator in the Senate subway on May 25.
Sen. Ted Cruz, R-Texas, warns the photographer about the end of the escalator in the Senate subway on May 25. (Tom Williams/CQ Roll Call)

A federal court in Washington sided with Texas Republican Sen. Ted Cruz on Thursday to strike down a “somewhat obscure” section of a 2002 campaign finance law, which is expected to give a boost to wealthier candidates who self-fund their campaigns.

A three-judge panel of the U.S. District Court for the District of Columbia found that Section 304 of the Bipartisan Campaign Reform Act unconstitutionally infringes on candidates’ free speech rights.

That section prohibits federal candidates who made personal campaign loans before the election from using more than $250,000 in post-election contributions to repay them.

The Federal Election Commission argued in the case that Congress could impose the limit to stop the risk and appearance of corruption when elected officeholders solicit contributions that will be used to repay their personal loans.

But the court wrote that there are no examples of that kind of quid pro quo corruption. And the decision leaned on a previous Supreme Court ruling that extended free speech protections to campaign financing because “effective speech requires spending money.”

“The loan-repayment limit does not serve that interest, and the government’s arguments to the contrary boil down to hypothetical concerns about influence and access to incumbents,” the panel wrote. “Such justifications are not sufficient under the First Amendment to uphold a statute that burdens political speech.”

The FEC declined to comment. Cruz spokesman Steve Guest called the unanimous decision “a resounding victory for the First Amendment and free speech.”

“The existing FEC rules benefited incumbent politicians and the super wealthy and they made it harder for challengers to run, and the court rightly struck them down as unconstitutional,” Guest said in a statement.

The case arose from Cruz’s 2018 run for Senate. He made two loans the day before the general election for a total of $260,000. After he won the election, Section 304 prevented Cruz from paying himself back the final $10,000.

Election and campaign lawyers said the decision could make it even easier for wealthy candidates to run for office.

“The constitutionality of this provision has long been in doubt, so this decision is not a surprise,” campaign finance lawyer Brett Kappel said. “It will make it marginally easier for both parties to recruit self-funding candidates.”

The FEC in the case pointed to comments from lawmakers at the time to demonstrate that the law intended to stop corruption. That included a statement from then-Texas Republican Sen. Kay Bailey Hutchison on the Senate floor that candidates “have a constitutional right to try to buy the office, but they do not have a constitutional right to resell it.”

But Cruz — who succeeded Hutchison when she decided not to seek reelection in 2012 — pointed to another part of that same speech, where she said the purpose was “to level the playing field so that one candidate who has millions, if not billions, of dollars to spend on a campaign will not be at such a significant advantage over another candidate who does not have such means as to create an unlevel playing field.”

The court’s decision points out that Section 304 in this case was enacted at the same time as Section 319, the so-called “Millionaire’s Amendment,” which the Supreme Court struck down in 2008 in part because it was intended to level electoral opportunities for candidates of different personal wealth.

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