The Supreme Court on Wednesday will wade into a new campaign finance debate when it hears a challenge brought by Sen. Ted Cruz to a law limiting the amount of money that can be repaid to candidates who loan large sums to their own campaigns.
The case could illustrate how the current court, with its 6-3 conservative majority, weighs government efforts to limit potential political corruption when its remedies clash with free speech claims.
The dispute hinges on a section of the 20-year-old Bipartisan Campaign Reform Act that bars a campaign from using more than $250,000 in post-election funds to repay a candidate's loans to fund his or her campaign.
Cruz, a Texas Republican, loaned $260,000 to his successful 2018 campaign against Democratic challenger Beto O'Rourke.
After the election — the most expensive Senate race in U.S. history at the time — Cruz's campaign committee had more than $2 million in cash on hand, but purposefully did not repay Cruz the full amount of his loan within a 20-day window. The $10,000 of Cruz's loan that exceeded the quarter-million-dollar repayment limit was therefore recharacterized as a contribution to his campaign.
Cruz has argued that the regulation violates the First Amendment's free speech protection. A federal district court sided with Cruz, ruling that the law discourages "the personal financing of campaign speech." The senator wants the Supreme Court to affirm the lower court's judgment.
The Federal Election Commission appealed, arguing to the high court that the cap on post-election loan repayment "imposes at most a modest burden on First Amendment rights." The FEC also argues that Cruz has not shown he has standing to challenge the law because "the injury was self-inflicted."
The agency contends that the limit is necessary to avoid the appearance of political corruption that can erode confidence in the government. That goal is "an interest of the highest order," the FEC said.
"The use of post-election contributions to repay personal loans creates a heightened risk of actual and apparent quid pro quo corruption," the agency argued, because "money that repays a personal loan after an election effectively goes into the candidate's pocket."
It also notes that "a donor who contributes money before an election does not yet know whether the recipient of the contribution will prevail, but a donor who contributes after an election does."
The court will likely issue a ruling in the case by late June or earlier.
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Supreme Court to hear Sen. Ted Cruz's challenge to law that limits campaign reimbursements to candidates - CNBC
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