May 18, 2022

Campaign Finance Struck Down

“The Supreme Court on Monday struck down a federal campaign-finance law that limits how and when candidates can repay loans that they make to their own campaigns… [The case] involved Section 304 of the Bipartisan Campaign Finance Reform Act, which allows candidates to use up to $250,000 in post-election contributions – but no more – to repay loans that they made to their campaign before the election. A lower court ruled that the $250,000 limit is unconstitutional because the government had not shown either that it serves an interest in preventing politicians from trading favors for contributions or that the limit is sufficiently targeted to serve that interest. The Supreme Court on Thursday upheld that ruling.” SCOTUSblog

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From the Left

The left criticizes the decision, arguing that it will encourage corruption.

“Now that this limit on loan repayments has been struck down, lawmakers with sufficiently creative accountants may be able to use such loans to give themselves a steady income stream from campaign donors. According to the Los Angeles Times, for example, Rep. Grace Napolitano (D-CA) made a $150,000 loan to her campaign at 18 percent interest in 1998 — before the 2001 law was enacted. Though Napolitano did eventually reduce the interest rate on this loan to 10 percent, the high-interest loan allowed her to make a considerable profit from donors…

“As of 2009, Napolitano reportedly raised $221,780 to repay that loan — $158,000 of which was classified as ‘interest.’ Because the 6-3 decision in Ted Cruz neutralizes the 2001 law, lawmakers may now potentially use a similar scheme in order to funnel legal bribes into their personal bank accounts…  

“Other lawmakers might not be quite as brazen in seeking to line their own pockets. But they still may be inclined to reward donors who help them recoup the cost of personal loans. As Justice Elena Kagan writes in dissent, a candidate who receives money that goes directly into their own pocket is likely to be ‘more grateful than for ordinary campaign contributions (which do not increase his personal wealth).’”

Ian Millhiser, Vox

“[In her dissent, Justice Kagan] recounted a series of scandals at the state and local level where state election laws did not have a Section 304 equivalent to show the dangers of abandoning it: ‘In Ohio, various law firms donated almost $200,000 to help the newly elected attorney general recoup his personal loans. Those donors later received more than 200 state contracts worth nearly $10 million in legal fees. In Alaska, a lobbyist collected almost $100,000 for post-election repayment of the Governor’s personal loans. A business in which he held an interest later received a $9 million state contract.’…

“In Kentucky, two Governors loaned their campaigns millions of dollars, ‘only to be repaid after the election by contributors seeking no-bid contracts.’… [Justice] Roberts, in rebuttal, dismissed those examples as ‘a handful of media reports and anecdotes.’ He also leaned on the strict quid pro quo aspect for anti-corruption measures to survive a First Amendment challenge, as opposed to less overt interchanges of money and power. It wasn’t enough for wealthy donors simply to entice a candidate with well-timed donations; they had to explicitly ask for a big bag of cash or favors or votes in exchange for it…

“In the court’s view, ‘corruption’ is a Thomas Nast cartoon where a Gilded Age robber baron gives a burlap sack of cash with a giant dollar sign on it to a member of Congress, and then the member of Congress gives the baron a piece of paper that says ‘votes’ or ‘legislation’ or ‘railroads’ on it back to him. Anything less obvious than this is, in the Roberts court’s eyes, free speech.”

Matt Ford, New Republic

From the Right

The right praises the decision, arguing that it will encourage political competition.

The right praises the decision, arguing that it will encourage political competition.

“[The Court] pointed out that the government was ‘unable to produce a single case of quid pro quo corruption in this context—even though most States do not impose a limit on the use of postelection contributions to repay candidate loans.’ Moreover, contribution limits even postelection are still capped at $2,900 under federal law, the amount considered to not risk the problem of possible ‘corruption.’…

“Furthermore, if that was really a risk, why does the $250,000 restriction apply to losing candidates, too? Obviously, they are in ‘no position to grant official favors,’ and the government did ‘not provide any anti-corruption rationale to explain why postelection contributions to those candidates should be restricted.’”

Hans von Spakovsky, Daily Signal

“As the Court quite properly noted, limiting the repayability of loans is a restriction on the loans themselves, and restricting the ability of candidates to loan money to their campaigns disproportionately affects certain types of candidates: challengers who need early money, and [who are] well-off enough to come up with a few hundred thousand dollars (the equivalent of a mortgage) but not so super-wealthy that they can just donate without expectation of repayment. That results in more protection for incumbents (the goal of much campaign-finance regulation), less speech, and less political competition.”

Dan McLaughlin, National Review

“More than 90% of campaign debt is candidate loans, per the Federal Election Commission. Since 2002, Chief Justice Roberts says, ‘the percentage of loans by Senate candidates for exactly $250,000 has increased tenfold,’ which suggests that people are trying to stay under the cap. Political competition is in the public interest, and the Chief adds that self-funding is ‘especially important for new candidates and challengers.’…

“Justice Kagan’s view of perceived corruption in politics is expansive. She cites a YouGov poll, commissioned by the government, in which 81% of Americans said they believed that post-election donors would likely expect political favors in return. OK, but would the public feel the same way about regular pre-election donors? The survey didn’t ask. The Chief’s opinion is a logical extension of the Court’s many precedents on free speech.”

Editorial Board, Wall Street Journal

“[The ruling] tends to build on the Citizens United decision, making that precedent a bit more firm. The majority cites Citizens United three times, while the dissent doesn’t mention it at all, but instead relies on a policy argument that this open-ended ability to fundraise ex post facto opens the door to corruption. The argument opposing that would be to note that corrupt activities can get prosecuted by the DoJ as criminal matters rather than regulatory restrictions on campaign speech and financing.”

Ed Morrissey, Hot Air

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