A new lawsuit by Sen. Ted Cruz, R-Texas, targets an obscure provision of campaign finance law.
At issue is loophole-closing language that restricts how much money lawmakers can accept from donors after Election Day as they seek to recoup loans they made to their campaigns.
The 2002 McCain-Feingold campaign finance law puts a $250,000 limit on payments from post-election donors, even if the candidate lent more, and there’s a 20-day deadline for donors to contribute. Cruz is suing the Federal Election Commission as enforcer of the provision.
Beyond those limits, “the donor is in effect putting money into an officeholder’s pocket, which is very dangerous from an anti-corruption perspective,” said Adav Noti, senior director of trial litigation at the Campaign Legal Center, a nonprofit organization that supports the regulation of political money.
He said abolishing the deadline would let a donor make a package contribution, to help reimburse the candidate for the old debt while also putting money into the upcoming re-election effort.
But fighting corruption isn’t the question here, said former FEC chairman Lee Goodman. He said the contribution limit — now $2,800 per donor per election — is so low that it’s the “ultimate guard against corruption.” He said, “It should not matter whether the donor makes that contribution before Election Day or after Election Day to retire the politician’s personal campaign loan.”
Cruz spokeswoman Catherine Frazier said the provision helps only two kinds of candidates: those “who can raise enough money from special interests,” and “ultra-wealthy candidates” who can pour money into their campaigns.
Cruz appeared to set up the issue last fall, when he was running for re-election against Democrat Beto O’Rourke. The day before the election, Cruz borrowed $255,000 from Goldman Sachs. He also wrote the campaign a personal check for $5,000. In December, after the 20-day deadline, the campaign paid off the first debt but not the second.
Congress debated and passed the McCain-Feingold law in 2001 and 2002, and along the way it struggled with the financial power of rich people — donors and candidates. The Supreme Court threw out a provision that sought to ease fundraising restrictions for candidates running against millionaires, citing the First Amendment to rule the provision diminished the free-speech spending of wealthy candidates.
Meredith McGehee, a veteran of the campaign-finance debates now with the reform group Issue One, said that Cruz “is trying to change the lens, if you will, from being about corruption into free speech and the ability to spend your own money, because that’s where this court has been sympathetic.”
Last year’s campaign wasn’t the first time Cruz made controversial campaign loans. During his first Senate run, in 2012, Cruz and his wife, Heidi, lent his campaign more than $1 million. Afterwards, Cruz revealed the funds were backed by personal loans they had obtained from Goldman Sachs and Citibank — transactions he hadn’t disclosed before the voting.
The FEC considered those loans to be campaign-related, and fined the Cruz campaign $35,000.