By Annie Cerria
On January 19th, the Supreme Court heard preliminary oral arguments in the case of Federal Election Commission v. Ted Cruz for Senate, a case that has the power to effectively legalize the bribery of elected officials in the United States. To understand how this has become even remotely possible, it is important to look at the legal precedents that have led to the case.
Beginning with the 2010 Citizens United v. Federal Election Commission ruling, which lifted limits on outside spending on elections under the argument that limiting the amount of money corporations can spend on elections would be restricting their right to free speech, campaign spending in the United States has risen to soaring new heights.
Restrictions were then further undone in 2014 with McCutcheon v. Federal Election Commission, which increased the limit on the total amount of money an individual or corporation could contribute to all candidates in an election. As predicted, the amount of money flooding into campaign bank accounts soared even higher.
Corporate money has flooded municipal, state, and federal government elections, oftentimes through anonymous groups like Super PACs (Political Action Committees). These are organizations that allow corporations and mega-wealthy individuals to donate any amount of money they choose to a candidate without having to disclose who is making the donation. This has transformed elections into incredibly expensive ventures; in the 2021 runoff for the Georgia senate, more than $470 million was spent on the race for now-Senator Jon Ossoff’s (D-GA) seat, and more than $360 million was spent on the contest for now-Senator Raphael Warnock’s (D-GA) seat.
This has created a culture within American politics that values donations as the lifeblood to any election. Elected officials are now constantly having to raise money, and outside donations are the driving force behind which candidates have advantages in elections. Therefore, any existing limits on candidates being able to use outside donations to aid their campaigns in any way are being met with challenges, which brings us to Federal Election Commission v. Ted Cruz for Senate.
Under existing Federal Election Commission guidelines, it is legal for a candidate to give their own money to their campaign as a loan that the campaign can then repay to the candidate after the election. While this has presented problems—such as Rep. Grace Napolitano (D-CA) legally being able to make a $150,000 loan to her campaign at 18% interest in 1998, resulting in over $71,000 in profits by 2009—provisions of the law have remained important safeguards against bribery.
The guidelines do not allow a candidate to make a loan over $250,000 that they intend to repay with campaign funds, in order to prevent large outside donations being given back directly to candidates. So, if Chuck Schumer, the senate majority leader, runs for re-election and desires to loan his campaign money and intends to pay himself back using money donated to the campaign, he can only loan up to $250,000.
In 2018, while running for re-election to the senate, Ted Cruz (D-TX) loaned his campaign $260,000 on the day before the general election as a challenge to the statute. His campaign then purposefully did not repay Senator Cruz within the established 20-day deadline, and eventually repaid him in $250,000 of campaign funds, while recharacterizing the outstanding $10,000 as a contribution from Senator Cruz to his campaign.
Cruz and his campaign then sued the Federal Election Commission, arguing that the existing restrictions are within violation of the First Amendment as they act as a burden on the exercise of political speech. While the Federal Election Commission is arguing that Cruz does not have a right to bring this case to court, arguing that he brought the injury upon himself, the Court for the moment has agreed to hear the case.
If the Court rules in favor of Cruz, which the culture of American campaign finance post-Citizens United and a conservative majority have all but guaranteed is a definite, the Federal Election Commission’s regulations will be completely eliminated.
As Ian Millhiser explained in an analysis for Vox, this will have major consequences: “[…] elected officials could potentially make enormous loans to their campaigns at high interest rates, and then use those loans as a vehicle to accept bribes from lobbyists and other donors who want to trade money for access to the official.”
If Cruz wins, there will be nothing to stop an official such as himself running for re-election from donating a massive amount of money to his campaign, and then repaying himself with funds that have been donated from an outside corporation. Corporations can then exploit this, as they will be allowed to pour vast sums of money directly into the bank accounts of elected officials, swaying them to vote certain ways on issues.
While this is an objectively absurd prospect, the culture in American campaign finance brought about by Citizens United has distorted reality in such a way that a decision like this was almost inevitable. Money and political speech are now interchangeable under the law, and any attempts to limit the amount of money in American politics can now be challenged, most likely successfully, as restrictions on free speech. American political campaigns have become such money pits that threatening spending in any way is seen as an affront to the law.
If anything, this case highlights that American campaigning has become fundamentally flawed. Elections are becoming drowned in corporate money, often from anonymous mega-groups, thwarting the ability of individual donors who simply do not possess bank accounts to match their corporate counterparts to make meaningful contributions to campaigns, or organize issue campaigns large enough to have any impact. If (most likely when) this decision is handed down, it will provide further mechanisms for corporations to cement their takeover of the American political system, further reducing the voices and concerns of the citizenry.
Ultimately, whatever the decision on this case is, it will have a landmark impact on the economics of the American political system. If the Court somehow rules against Cruz, it may provide the first cracks in Citizens United’s otherwise bulletproof protection over the elimination of campaign finance regulations, potentially paving the way for some undone protections against bribery and corruption to be reinstated. If the court rules in favor of Cruz, it will forever characterize the modern American political landscape as one defined by corporate money and campaign corruption.
The views expressed in this article are the author’s own and may not reflect the opinions of the St Andrews Economist.