A campaign finance case currently pending before the U.S. Supreme Court, Federal Election Commission (FEC) vs. Cruz, could have serious implications for corruption in the United States. The essential facts of the case are these: Just a day before Senator Ted Cruz’s narrow victory in the 2018 Senate election, Cruz personally lent $260,000 to his campaign. Under federal campaign finance law, contributions to a candidate’s campaign that come in after the election has already occurred can be used to repay up to $250,000 in personal loans a candidate has made to their own campaigns, but no more. Therefore, Cruz’s campaign reimbursed him only $250,000, not the full $260,000. Cruz challenged the cap on reimbursing a candidate’s personal loans from post-campaign donations as an unconstitutional limit on political speech in violation of the First Amendment of the U.S. Constitution.
If Cruz wins—and he very well might—the result could be a substantial increase in bribery of U.S. elected officials. As many commentators have noted (see here, here and here), allowing a victorious candidate to have their loans repaid by private interests is a recipe for quid pro quo corruption. After all, this money goes into an elected official’s pocket, and the fact that the contributions are made after an election increases the likelihood that a post-election donor knows that the recipient will be in a position to do him official favors. But the risks that this case poses to anticorruption law go beyond the particular activity at issue in the case itself. There is a very real risk that the Supreme Court will use this case to further limit the sorts of interests that can justify campaign finance restrictions of any sort, thereby jeopardizing seemingly well-established and recognized limitations on political spending that have long been justified on the grounds that they prevent corruption and its appearance.
To understand the potential ramifications of this case, it’s important to understand how the First Amendment, as interpreted by the Court, affects campaign finance regulation. The Court long ago held, for better or worse, that political donations are protected by the First Amendment’s guarantee of free speech, on the logic that political spending is essential to “the right to participate in public debate through political expression and political association.” This does not mean that the government cannot adopt any campaign finance regulations. But it does mean that such regulations must be justified by a “compelling government interest.” One such interest—which the Court has long recognized as sufficiently compelling to justify at least some restrictions on political donations—is the prevention of corruption or the appearance of corruption. However, over the years the Court has steadily narrowed its understanding of what sorts of “corruption” are sufficient: The Court, for example, has held that the interests in prevention of general favoritism or influence, or seeking of access to elected officials, are not enough to justify restrictions on campaign donations; indeed, the Court has indicated that the only legitimate governmental interest for campaign finance restrictions is the prevention of quid pro quo corruption or its appearance.
It is that longstanding principle—that campaign finance restrictions that prevent the appearance of quid pro quo corruption—that the Cruz case may undermine. After all, it is not hard to see why allowing private interests to cover an unlimited amount of a candidate’s personal loans, after the election is already over, creates, at the very least, the appearance of quid pro quo corruption. (Imagine a candidate who loaned a million dollars to his campaign and, though victorious, finds himself on the brink of personal bankruptcy; a private party then offers to cover the million-dollar personal debt—and does so right before or right after the elected official takes some official that benefits that private party. The appearance of quid pro quo corruption is hard to deny.) Yet the lower court found that this asserted interest was insufficiently “compelling” to justify the $250,000 cap on using post-election donations to repay personal loans. The court reasoned that the loan repayment limit has only a tenuous connection to the government interest in preventing corruption, especially given the FECs failure to identify a single case of actual quid pro quo corruption in this context. In short, the court seemed to indicate that the prevention of a (plausible, reasonable) appearance of quid pro quo corruption is not enough to justify a campaign spending, if the government cannot demonstrate that the restriction is needed to prevent actual, documented cases of such corruption.
If the Supreme Court embraces the lower court’s reasoning, or something similar, many longstanding and widely-accepted campaign finance restrictions may be in jeopardy. Consider, for example, the law that prohibits federal contractors from making any contributions in federal elections. The rationale for such a ban is straightforward and sensible: If government contractors give generous campaign contributions to officials who can steer federal contracts to those firms, there is a high risk of “pay-to-play” corruption. Moreover, the prohibition on such donations prevents the appearance that taxpayer-funded contracts are for sale.
But if the Supreme Court agrees with the lower court’s ruling in the Cruz case, the outright ban on campaign donations by government contractors may be vulnerable to constitutional attack. This ban has largely focused on the avoidance of the appearance of corruption and the general sense that people who have a direct financial interest in government action should be treated differently from those whose financial interests are not so directly impacted. But this “general sense” may no longer be enough. The lower court’s reasoning in Cruz might be read to imply that the ban could be justified only if the government could provide direct evidence of quid pro quo corruption involving contractors and elected officials. This is an extremely high bar, one that the government may have difficulty meaning. One reason for this is the ban itself, which has been in place since the 1940s. If that ban has been effective in preventing pay-to-play corruption, then it will be hard to find examples of it occurring. Perhaps more importantly, pay-to-play is typically a subtler form of political corruption, one that involves potential future benefits and conduct, as opposed to any explicit agreement. Likewise, the influence that elected officials have over the award of federal contracts, though real, is often indirect and hard to detect—not least because of other federal contracting requirements that are designed to safeguard the integrity of the federal procurement process. It’s therefore hard to produce recent cases where pay-to-play corruption has clearly occurred, at least in the context of federal contracting.
Yet if this commonsense ban were to be lifted—or if the Court were to strike it down—the threat of pay-to-play corruption would likely soar, and would most certainly create the appearance that government contracts are for sale. It’s impossible to think that politicians who benefit from campaign contributions would not feel gratitude towards their benefactors and would create opportunities more favorable for them. Without such restrictions on federal contracting contributions, the integrity of the electoral system and democracy may well further deteriorate. That this and other similar restrictions might be vulnerable to future legal challenges is one of the reasons that the possibility of a broad ruling in FEC v. Cruz is so alarming.