A New Challenge to the Bipartisan Campaign Finance Reform Act

In 2010 the conservatice political advocacy group Citizens United challenged Section 203 of the Bipartisan Campaign Reform Act of 2002 (BCRA). BCRA had stipulated that corporations and labor unions could not directly fund “electioneering communications” from their general treasuries. In that case – Citizens United vs the Federal Election Commission – the Supreme Court ruled in a five to four decision that under the First Amendment corporations had a right to free speech; beyond this, the Court decided that spending money on political broadcasts, in support or against a candidate, should be considered speech and therefore cannot be limited. The Court’s five conservative justices formed the majority, and the remaining four justices, referred to as the liberal coalition, dissented. The decision has arguably impacted the dynamics of every federal and state election since 2010.  

Now, after almost 12 years since the historic Citizens United v. Federal Elections Commission decision, the Bipartisan Campaign Reform Act is under attack once again. In recent months, Texas Senator Ted Cruz (R-TX) has challenged another provision of the BCRA regarding repayment of personally-financed loans from a candidate to their campaign. In 2018, Ted Cruz loaned $260,000 to his Senatorial re-election campaign. Currently, candidates for public office may give unlimited loans of any amount to their campaign committees. These candidates may be repaid with either pre-election donations, money collected from donors before the election ends, or post-election donations, money collected from donors after the election ends.

So why was Senator Ted Cruz left with a net loss of $10,000 by the end of his campaign? The BCRA allows repayments of loans of more than $250,000 if the campaign uses pre-election donations as repayment and if the payments are made within 20 days of election day. Contrastingly, the BCRA specifies that post-election donations can only cover up to $250,000 of the loan. When Cruz was out $10,000 after his campaign was unable to repay his personal loan before the 20-day deadline, he petitioned that this provision of the BCRA unfairly impeded his First Amendment rights.

Earlier last month, a special three-judge district court in Washington sided with Cruz’s campaign, agreeing that the financial burden unfairly infringed upon the candidate’s political expression. One of the judges, Judge Neomi Rao, justified the lower Court’s decision, stating "Protections for political speech extend to campaign financing because effective speech requires spending money...the loan-repayment limit intrudes on fundamental rights of speech and association without serving a substantial government interest."

Subsequently, the FEC filed an appeal to the Supreme Court, who agreed to hear the case, Federal Election Committee v. Ted Cruz for Senate, in their current session.

A push from the Biden administration on campaign finance issues likely encouraged the Court to take the case. On July 2nd, 2021, the then-acting solicitor general, Elizabeth B. Prelogar, filed a brief on behalf of the administration that argued against Cruz and in favor of the FEC. In her brief, she writes that, "the loan-repayment limit imposes at most a modest burden on First Amendment rights...It does not limit the amount of money that a candidate may spend, the amount of money that a campaign may borrow, the amount of money that a candidate may raise or the amount of money that a donor may contribute to a campaign."

In her brief, Prelogar stresses that the 20-day time limit merely constrains repayment through pre-election donations. According to Prelogar, post-election contributions are more likely than pre-election contributions to be used to solicit special favors for the donor; though, this claim does not have much empirical evidence to back it — the FEC has been unable to show “that quid pro quo corruption or its appearance arises from post-election contributions to retire a candidate’s personal debt.”

Prelogar also points out that Senator Cruz’s campaign had over $2 million available after the election, with which they could have repaid the loan. Instead, the campaign purposely missed the 20-day deadline to prompt the start of the case. Cruz’s lawyers have explained that their campaign owed over $2 million to vendors and was required to repay them before Senator Cruz. However, no matter how the case came to fruition, Cruz’s argument still holds. As his lawyers argued, "Existing FEC rule benefits incumbent politicians and the super wealthy by making it harder for challengers to run for office...by substantially increasing the risk that any candidate loan will never be fully repaid — forces a candidate to think twice before making those loans in the first place...We’re confident the Supreme Court will again rule in favor of the First Amendment and free speech."

Cases regarding infringement upon First Amendment rights have always been a controversial topic on the Supreme Court. Generally, the Court tends to side with the plaintiff, the person or group whose freedom of speech is being thwarted — and Cruz’s lawyers point to this by saying the Court will “again” rule to protect free speech. The use of the word “again” is a clear reference to Buckley v. Valeo, which established that spending money must be considered speech, and Citizens United, which, as mentioned above, established that corporate spending on political broadcasting cannot be limited.

A cornerstone of the majority’s argument in Citizens United is that the government does not have the jurisdiction to interfere with the “marketplace of ideas;” beyond this, they may not attempt to “ration” speech based on the extent of support in the country for a given opinion. Cruz’s argument is similar — restricting loan repayment to the candidate to $250,000 allows for the views of incumbent politicians to dominate the “marketplace of ideas.”

Given the history of campaign finance reform and the current partisan political environment, this case is likely to stir up some tension. If Cruz were to win the case, it would be a major win for the Republican party, and yet another loss to the current Democratic majority in Congress. Moreover, with less regulation of misinformation on social media, it will be up to the user to decipher fact from fiction.

Margaret Nesi is a sophomore at Brown University, concentrating in Computer Science and International and Public Affairs. She is a staff writer for the Brown University Undergraduate Law Review and can be contacted at margaret_nesi@brown.edu