Cruz Case Aside, Opportunity Remains for Expanded Campaign Finance Disclosure Laws in New Jersey
A federal campaign finance law preventing federal candidates from repaying personal loans over $250,000 with money raised after the election was ruled unconstitutional by the U.S. Supreme Court on May 16, 2022.
The law was challenged by Senator Ted Cruz of Texas. Cruz objected to a provision of federal campaign finance law that prevented federal candidates from loaning each other more than $250,000.
Section 304 of the Bipartisan Campaign Reform Act of 2002 (BCRA) limits a candidate who provides a personal campaign loan from raising money after the election to repay more than $250,000.
Senator Cruz felt that the provision violated First Amendment rights. The case, Federal Election Commission (FEC) against Ted Cruz for the Senateconstituted another series of legal challenges against the BCRA, otherwise known as the McCain/Feingold.
Admittedly, there was a bit of play on the part of the senator. On the eve of Election Day in 2018, he loaned his campaign $260,000; $5,000 from his personal bank account and $255,000 from a loan secured by his personal assets.
Nonetheless, the goal exposed a legitimate grievance by testing the law against First Amendment constitutional standards. This included Federal Election Commission (FEC) regulations that had established a 20-day post-election window in which personal loans of up to $250,000 could be repaid using donations received before, during or after polling day.
In other words, once the 20-day period is over, candidates can no longer use their campaign accounts to repay loans over $250,000, although loans below that amount can be repaid.
Federal Election Commission Rules for Federal Nominee Loan Repayment
|Applicant Loan Amount||Within 20 days after the election||More than 20 days after the election|
|$250,000 or less||Can use contributions collected before, during or after the election|
|Over $250,000||Can use contributions collected before the election||Refund is no longer allowed|
In its decision, the Supreme Court ruled 6 to 3 that the law, by imposing major restrictions on repayment beyond the $250,000 threshold, discouraged applicants from taking out personal loans as part of their applications, thus violating their First Amendment free speech rights.
In Senator Cruz’s case, the 20-day window prevented him from recovering $10,000 of his personal money.
The Supreme Court ruling was the fifth since John Roberts was confirmed as Chief Justice in 2005 to strike down sections of the BCRA.
The case has stoked fears among individuals and organizations in favor of strict campaign finance regulation that the Supreme Court could strike down what remains of the law.
Those concerns were understandable given that U.S. Senate Minority Leader Mitch McConnell, no friend of campaign finance regulation, had submitted an amicus brief seeking to remove what was left of the BCRA.
A lawsuit filed on McConnell’s behalf shortly after the law was enacted resulted in a December 10, 2003 ruling that narrowly upheld its key provisions. But it also included the first two statements that parts of the BCRA were unconstitutional — a provision banning contributions from minors and another limiting the ability of parties to make independent expenditures on behalf of candidates.
Several pro-regulation groups were so concerned about what the Supreme Court might do in the Cruz case that they intervened on behalf of the FEC. They defended the constitutionality of Section 304, saying allowing unlimited repayment of candidate loans could be corrupt.
The Cruz case confronted the Supreme Court with two main questions: whether Senator Cruz had standing to challenge the law and whether the limit violated the free speech clause of the First Amendment.
One of my previous columns on the case published on January 24, 2022 argued that pro-regulation groups and Senator McConnell would be “disappointed.”
He accurately predicted that the Court would rule that the Senator has standing, that Section 304 of the BCRA would be declared unconstitutional, and that the Court would not strike down what remains of the BCRA.
“The Court is likely to accept Senator Cruz’s argument that the $250,000 cap requires the candidate to loan no more than $250,000, thereby infringing the candidate’s First Amendment rights,” the column said. previous.
One of the takeaways from this case is that the New Jersey legislature has shown considerable wisdom in its approach to regulating a similar issue under that state’s campaign finance laws.
The legislature authorized non-gubernatorial candidates to personally loan unlimited amounts to their campaigns and to have the loans repaid after the election with post-election contributions.
Under New Jersey law, contributors are not allowed to exert undue influence on candidates because contributions before or after the election are subject to contribution limits and reimbursement can only be made up to of the loan amount.
If this provision influenced the Supreme Court, who knows. But the Cruz decision appears to reflect New Jersey’s common sense approach.
No doubt many learned people whose focus is on campaign finance law have breathed a sigh of relief that the Supreme Court has not completely struck down the BCRA or targeted other campaign finance laws. campaign financing.
Regarding those sentiments, this columnist has always argued that the Supreme Court, despite its free speech concerns and relying on both precedent and political common sense, would continue to uphold the laws. fundamentals of campaign finance such as contribution limits and disclosure.
So far, that has been the case, as indicated by an April 22, 2022 Supreme Court decision to authorize a stand-alone Rhode Island spending disclosure law.
The court’s longstanding support for disclosure signals an openness for the state legislature to re-engage in passing legislation that, like Rhode Island law, would require disclosure by independent groups engaged in the campaign trail. in New Jersey.
Recently, independent groups have spent tens of millions trying, with considerable success, to influence New Jersey’s election results. It is time these groups were legally placed on an equal footing with candidates and political parties, who are required to fully disclose their financial activity, to rebalance the state’s electoral system.
Jeff Brindle is the executive director of the New Jersey Election Law Enforcement Commission.
The opinions presented here are his own and not necessarily those of the Commission.
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