Terry H. Schwadron

Jan. 18, 2022

A Supreme Court case this week suggests more change for politics and campaign money that could legalize untraceable money that can go to a candidate once elected.

In other words, it could legalize corrupt profit to elected officials – something that in distinctly un-legal terms we might otherwise call bribery.

The case scheduled for hearing on Wednesday is being brought by the campaign of Sen. Ted Cruz (R-Tex.), a guy who’s never shy about promoting himself as a major voice on any subject or for the presidency itself.  His challenge centers on campaign finance laws that currently sets limits on paying back loans by the candidate to his own political run. The Court’s hearings are available live here.

Here’s how the law works now: Candidates can lend money to the campaign openly.

Loan repayments before the election are subject to public disclosure about the source of money. After the election, donor dollars can go straight to the candidate – now in office – without disclosure.

In 2001, Congress enacted a provision that says a campaign may not repay more than $250,000 worth of the loan using funds raised after the election.

The idea was to limit anything that looks like a bribe.

This involves politicians from all parties, of course.

Payback With Profit

A story in Vox.com makes clear that “a lawmaker with sufficiently clever accountants, moreover, could effectively structure such a loan to allow lobbyists and other donors to help the lawmaker directly profit from it.”

According to the Los Angeles Times, for example, in 1998, Rep. Grace Napolitano (D-Ca.) made a $150,000 loan to her campaign at 18 percent interest (later reduced to 10 percent). As of 2009, Napolitano reportedly raised $221,780 to repay that loan — $158,000 of which was classified as “interest.” Over 11 years, the loan reportedly earned Napolitano nearly $72,000 in profits.

This case, Federal Election Commission v. Ted Cruz for Senate, asks the Supreme Court to strike down the limit on loan repayments to federal candidates. If they do so, any lawmaker could make a big, high-interest loan to the campaign and then collect post-election donations directly into their pocket without disclosure of the source of the money.

The Justice Department is arguing that  “a contribution that adds to a candidate’s personal assets (and that can accordingly be used for personal purposes) poses a far greater threat of corruption than a payment that merely adds to a campaign’s treasury (and that can accordingly be used only for campaign purposes).”

Cruz claims that permitting such contributions is necessary to protect “the rights of candidates and their campaign committees to make constitutionally protected decisions about when and how much to speak during an election.”

Skip the lawyer talk, and what you have is legalize payments to officeholders with dark money – again, bribery in plain language.

Disdain for Campaign Limits

This is the Supreme Court majority that likened corporate election money to free speech in its Citizens’ United v. FEC decision in 2010 and has narrowed the meaning of the word “corruption” to make such bad practices almost impossible to enforce.

Citizens Unitedheld that federal and state campaign finance laws may only target “quid pro quo” arrangements, where money is offered in return for “political favors.” At least two or three attempts to prosecute officials for corruption in both parties have been thrown out by the courts.

Since 2010, the Court has become decidedly more conservative, and rulings even last week, is indicating that it sees limits to the authority of federal agencies.  

As Vox noted, Justice Brett Kavanaugh, for example, suggested in a 2002 email that he wrote while he was a White House official that there are “some constitutional problems” with laws placing a cap on how much an individual donor can give to a candidate — something that even Citizens United permits. And last July, the conservatives on the Court blocked a California rule requiring certain political donors to be disclosed—extending beyond the explicit language in Citizens United.

So, it might be wise not to bet against a conservative majority that seems to think ill of campaign finance regulation and making it legal for wealthy donors to send money to lawmakers without tracking.

Cruz has acknowledged that he devised this lawsuit specifically to challenge the restriction on loan repayments. According to the Justice Department, on the day before the 2018 election, Cruz lent his campaign $260,000, or $10,000 more than the amount that can legally be repaid from post-election funds. While a federal regulation permits Cruz’s campaign to pay back all that money using funds raised before the election up to  20 days after the election, the campaign waited until after this deadline had passed to pay back $250,000 of the $260,000 loan.

Cruz and his campaign do not contest that “the sole and exclusive motivation behind Senator Cruz’ actions in making the 2018 loan and the committee’s actions in waiting to repay them was to establish the factual basis for this challenge.” Cruz was essentially willing to risk $10,000 of his own money for an opportunity to knock down a federal anti-corruption law.

You’ve got to love American ingenuity.


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