On May 16, 2022, the United States Supreme Court ruled that
limiting the repayment of candidate loans to their own campaign to
$250,000 (codified under 52 U.S.C. § 30116(j)) is
unconstitutional. The Plaintiffs, Ted Cruz for Senate and Senator
Ted Cruz, filed suit against the Federal Election Commission
("FEC"), stating that the repayment limitation
unconstitutionally infringes the First Amendment rights of the
Senator, the Campaign, and any individuals who might seek to make
post-election contributions.
In finding the loan repayment limit unconstitutional, the Majority
called such limitation a "drag" on a candidate's
First Amendment rights. Specifically, the Court emphasized personal
loans as a "ubiquitous tool for financing electoral campaigns[
]" as the bulk of the seed money for many current campaigns
are personal loans from candidates to get the campaign started. The
ability to lend money to campaigns, the Court emphasized, is
essential to new candidates and challengers, as they are often
fighting uphill battles against incumbents. Notably, the Court
unanimously concluded that the loan repayment limit infringed in
some degree on the First Amendment rights of candidates.
Because the loan repayment limit infringed on First
Amendment-protected electoral speech, the Court next considered
whether the loan repayment limit was justified by a
"permissible interest." While the Court did not opine as
to what level of scrutiny was required, it made clear that the
government could not meet its burden under any scrutiny standard.
First, the Court noted the government's inability to
provide a single case of quid pro quo corruption due to not having
a loan repayment limit, despite most states not having a loan
repayment limit. Rather, the government relied on articles that
hypothesized potential issues that could occur without the loan
repayment limitation. In response to this, the Court stated that
the "[g]overnment may not seek to limit the appearance of mere
influence or access" and that while "the line between
quid pro quo corruption and general influence may seem vague at
times[,]" the First Amendment "requires [the Court] to
err on the side of protecting political speech rather than
suppressing it." Second, Court also dismissed the
government's argument that using contributions to repay a loan
is equivalent to a "gift," stating that because
candidates are already repaid in full for their loans. As such,
increasing the amount a candidate can be repaid does not increase
any quid pro quo concerns. Third, the Court attacks the
government's argument that the Court should use
"legislative deference" in this case on two grounds: (1)
the Court providing deference to the legislature, especially in
situations where the law may have been passed as an effort to
"insulate legislators from effective electoral challenge"
is inappropriate; and (2) the Court's role is "to decide
whether a particular legislative choice is constitutional,"
not to be beholden to legislators.
Practically speaking, this holding allows candidates to loan their
own campaign unlimited resources and then eventually get paid back
from the campaign. We expect the FEC to release further guidance to
campaign committees in the near future.
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