WASHINGTON — The day before his narrow victory over Beto O’Rourke in 2018, U.S. Sen. Ted Cruz borrowed against his personal investment account and put $260,000 into the final push.
Under federal campaign law, candidates can’t recoup more than $250,000 if they wait more than 20 days to collect donations they’ll use to repay personal loans.
Cruz, R-Texas, left the $10,000 on the table on purpose, to establish the right to challenge that rule on grounds it infringes on his free speech rights.
On Thursday, the U.S. Supreme Court agreed to hear the case sometime this fall. Oral arguments haven’t yet been scheduled.
In April 2019, Cruz and his campaign sued the Federal Election Commission, hoping to overturn the part of the 2002 Bipartisan Campaign Reform Act, signed by President George W. Bush, that caps loan repayments.
The FEC argues that the provision ensures that winners can’t shake down donors, and that donors can’t curry favor by lining the pockets of a candidate they know will be in office for the next few years.
“If what you’re looking for is influence or access, you’re not certain you’ll get it before the election. After the election, there’s some greater certainty,” Judge Neomi Rao of the U.S. Court of Appeals for the D.C. Circuit said at one point in a hearing last October.
Cruz’s attorney, Chuck Cooper, argued that the law wasn’t aimed at corruption, but rather to level the playing field so underfunded candidates could borrow as much as needed. The limit, he asserted, violates the First Amendment by hampering a candidate’s ability to use personal funds to run for office.
Cruz won reelection with 51% against O’Rourke, then a three-term El Paso congressman.
It was the costliest Senate contest in history at the time, with candidates raising $125 million combined.
Cruz raised $45 million. O’Rourke raised $79 million.
Of the $260,000 that Cruz loaned to his campaign committee at the end, $5,000 came from his personal bank accounts. The rest came from a loan against his margin account with Goldman Sachs, the investment bank where his wife, Heidi, worked. A margin account allows investors to buy securities with borrowed funds.
As of election night, the Cruz campaign had $2.2 million and debts of $2.5 million, according to court records and FEC filings.
The campaign paid vendors first. None of the $260,000 that Cruz personally loaned was repaid within the first 20 days, though by the end of December, he had recovered all but $10,000.
The senator asserted in a court filing that, if not for the legal restriction, he “would solicit debt-retirement funds from potential donors and would use post-election contributions to defray the remaining $10,000 loan balance.”
In the lower court hearing last October, U.S. District Judge Amit Mehta sounded skeptical, telling Cruz’s lawyer that he hadn’t shown that candidates would borrow more if not for the restrictions on getting repaid later.
But judges on the three-judge panel also questioned the FEC’s assertion that the rule reduces corruption.
Mehta noted that no candidates have been prosecuted for soliciting donations after the deadline in order to recoup personal loans.
Judge Timothy Kelly said the $250,000 cap seemed “strange” — not zero but not unlimited. “It almost feels like what the current law allows is a little bit of the appearance of corruption,” he said.
The FEC’s attorney responded that Congress settled on that figure to strike a balance between curbing corruption and providing candidates flexibility needed to finance their campaigns.
Rao and Kelly are Donald Trump appointees. Mehta was named to the court by Barack Obama.
