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Supreme Court strikes down limit on repaying campaign loans in win for Ted Cruz

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Washington — The Supreme Court on Monday invalidated a provision of federal campaign finance law capping the amount of money a candidate can be repaid for personal loans made to their campaign, siding with GOP Sen. Ted Cruz of Texas in his challenge to the restriction.

The 6-3 ruling from the court's conservative majority is the latest in a string of decisions that have unraveled campaign finance limits under the First Amendment. This latest legal fight was mounted by Cruz, who loaned his 2018 reelection campaign $260,000 the day before the general election to force a challenge to the law.

Writing for the majority, Chief Justice John Roberts said the provision at the center of the case, known as Federal Election Commission v. Ted Cruz for Senate, "burdens candidates who wish to make expenditures on behalf of their own candidacy through personal loans," and violates the First Amendment rights of candidates and their campaigns to engage in political speech.

"By inhibiting a candidate from using this critical source of campaign funding, however, Section 304 raises a barrier to entry — thus abridging political speech," Roberts wrote.

Justices Elena Kagan, Stephen Breyer and Sonia Sotomayor, the court's three liberal justices, dissented. Kagan, joined by her two colleagues, warned that with its decision, the court's majority "greenlights all the sordid bargains Congress thought right to stop" through the loan-repayment limitation.

"In discarding the statute, the court fuels non-public-serving, self-interested governance. It injures the integrity, both actual and apparent, of the political process," she wrote.

A spokesperson for Cruz called the decision a "resounding victory" for the First Amendment.

"Sen. Cruz is gratified that the Supreme Court ruled that the existing law imposed an unconstitutional restriction on free speech that unfairly benefited incumbent politicians and the super wealthy," the spokesperson said in a statement. "This landmark decision will help invigorate our democratic process by making it easier for challengers to take on and defeat career politicians." 

The restriction at the crux of Cruz's dispute with the FEC was enacted by Congress under the Bipartisan Campaign Finance Reform Act of 2002, known as the McCain-Feingold Act after its two sponsors. Under the measure, a campaign can use post-election contributions to repay up to $250,000 to a candidate who loaned money to their own campaign. A subsequent rule from the FEC imposes a 20-day time limit after Election Day for a campaign to use money raised before the election to repay the portion of a candidate's loan exceeding $250,000.

During his last Senate run, against Democrat Beto O'Rourke, Cruz loaned his campaign $10,000 more than the maximum amount allowed to be reimbursed with post-election contributions under the law. Cruz's campaign then repaid him $250,000, but was prohibited from reimbursing him the remaining $10,000 because of the 20-day window.

Cruz then challenged the FEC's rule in April 2019, arguing the loan-repayment cap violates the First Amendment. While the FEC moved to dismiss the suit on the grounds Cruz did not have the legal standing to challenge the restriction, a three-judge federal district court panel in Washington disagreed. The court also invalidated the reimbursement limit as a violation of the First Amendment, finding it burdens the exercise of political speech.

The Texas senator had support in his bid to dismantle the loan-repayment rule from Senate Minority Leader Mitch McConnell, who told the Supreme Court in a friend-of-the-court brief that the case should be used as a vehicle to scrap the entirety of the 2002 campaign finance law. 

But the Justice Department, arguing on behalf of the FEC, said the rule was needed to prevent corruption and appearance of corruption.

The court's conservative majority said it approached the anticorruption interest "with a measure of skepticism," in part because individual contributions to candidates seeking federal office are already subject to regulations in order to prevent corruption or the appearance of corruption.

"The government has not shown that Section 304 furthers a permissible anticorruption goal, rather than the impermissible objective of simply limiting the amount of money in politics," Roberts wrote.

The justices heard oral arguments in Cruz's court fight with the FEC in January, during which the court's conservative members appeared skeptical of the reimbursement cap.

Justice Brett Kavanaugh suggested the rule chilled a candidate's ability to loan their own campaigns money, as they risked foregoing repayment of amounts over $250,000.

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