WASHINGTON – The day before his narrow victory over Beto O’Rourke in 2018, Senator Ted Cruz borrowed from his personal investment account and invested $ 260,000 in the latest push.
Under federal election campaign law, candidates cannot recover more than $ 250,000 if they wait more than 20 days to collect the donations they will use to repay their personal loans.
Cruz deliberately left the $ 10,000 on the table, to establish the right to challenge this rule on the grounds that it violates his rights to free speech.
On Thursday, the United States Supreme Court agreed to hear the case this fall. The pleadings have not yet been scheduled.
In April 2019, the Texas Republican and his campaign sued the Federal Election Commission, hoping to overturn the part of the 2002 bipartisan campaign reform law, signed by President George W. Bush, which caps loan repayments.
The FEC argues that the provision ensures that winners cannot shake donors, and that donors cannot win favor by lining the pockets of a candidate they know will be in power for the next several years.
In June, a three-judge panel of the Federal Court of Appeal sided with Cruz, abolishing the cap on the amount candidates can raise after an election to repay loans, saying the federal restriction was not not justified because the FEC had “not identified a single case of genuine quid pro quo corruption” involving loan repayments.
The Biden administration has appealed.
Cruz was re-elected with 51% against O’Rourke, then a congressman from El Paso for three terms.
It was the costliest Senate competition in history at the time, with contestants raising a combined $ 125 million.
Cruz raised $ 45 million. O’Rourke raised $ 79 million.
Of the $ 260,000 that Cruz ultimately loaned to his campaign committee, $ 5,000 came from his personal bank accounts. The rest came from a loan from 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.
On election night, the Cruz campaign had $ 2.2 million and $ 2.5 million in debt, according to court records and FEC records.
The campaign paid the suppliers first. None of the $ 260,000 that Cruz personally loaned was repaid in the first 20 days, although by the end of December he had recovered all but $ 10,000.
The senator claimed in a court record that, without the legal restriction, he “would solicit debt repayment funds from potential donors and use post-election contributions to cover the balance of the $ 10,000 loan.”
At the lower court hearing last October, U.S. District Judge Amit Mehta was skeptical, telling Cruz’s attorney that he had not shown that applicants would borrow more without the restrictions on funding. subsequent reimbursement.
But the judges on the three-judge panel also questioned the FEC’s claim that the rule reduces corruption.
Mehta noted that no candidate has been prosecuted for soliciting donations after the deadline to collect personal loans.
Judge Timothy Kelly said the $ 250,000 cap seemed “odd” – not zero but not unlimited. “It almost feels like what the current law allows is a bit of the appearance of corruption,” he said.
The FEC lawyer replied that Congress had set itself on this figure to strike a balance between the fight against corruption and the flexibility candidates need to finance their campaigns.
Rao and Kelly are nominated by Trump. Mehta was appointed to the court by Barack Obama.