The decision this morning by the Supreme Court in FEC v. Ted Cruz for Senate, delivered in a 6–3 opinion written by Chief Justice Roberts, is good news for skeptics of campaign-finance regulation. The Court struck down Section 304 of the Bipartisan Campaign Reform Act of 2002 (BCRA), better known as McCain-Feingold. Under Section 304, if a candidate loans his campaign more than $250,000, the loan amount in excess of $250,000 cannot be repaid more than 20 days after the election — at that point, any unpaid balance is treated by the FEC as a donation by the candidate to his own campaign.
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 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:
That risk [of non-repayment] in turn may deter some candidates from loaning money to their campaigns when they otherwise would, reducing the amount of political speech. This drag on a candidate’s First Amendment right to use his own money to facilitate political speech is no less burdensome simply because it attaches as a consequence of a statutorily imposed choice. . . . The drag, moreover, is no small matter. Debt is a ubiquitous tool for financing electoral campaigns. The raw dollar amount of loans made to campaigns in any one election cycle is in the nine figures, significantly exceeding the amount of independent expenditures. . . . And personal loans from candidates themselves constitute the bulk of this financing. . . . More than 90% of campaign debt consists of candidate loans. . . . In fact, candidates who self-fund usually do so using personal loans. . . . The ability to lend money to a campaign is especially important for new candidates and challengers. As a practical matter, personal loans will sometimes be the only way for an unknown challenger with limited connections to frontload campaign spending. . . . And early spending—and thus early expression—is critical to a newcomer’s success. (Quotations and citations omitted).
The Court cited data:
The data bear out the deterrent effect of Section 304. After BCRA was passed, there appeared a clear clustering of candidate loans right at the $250,000 threshold. . . . There was no such clustering before the loan-repayment limitation went into effect. The Government’s evidence . . . reflects that the percentage of loans by Senate candidates for exactly $250,000 has increased tenfold since BCRA was passed. . . . Section 304, then, has altered the propensity of many politicians to make large loans. . . . In doing so, it has predictably restricted a candidate’s speech on behalf of his own candidacy. (Quotations and citations omitted).
The theory behind Section 304 is that donors giving money after a campaign has ended, in order to retire debts owed to the candidate himself, know that they are putting money directly in the candidate’s pocket, and know who won the election. While many campaign-finance rules are illogical or unrealistic, this is not an unreasonable supposition. But Roberts didn’t buy this as a justification for restricting the free-speech rights of candidates to lend their own campaigns money, at least not without very direct evidence of a problem:
This Court has recognized only one permissible ground for restricting political speech: the prevention of “quid pro quo” corruption or its appearance. For example, we have denied attempts to reduce the amount of money in politics . . . to level electoral opportunities by equalizing candidate resources . . . and to limit the general influence a contributor may have over an elected official. . . . However well intentioned such proposals may be, the First Amendment—as this Court has repeatedly emphasized—prohibits such attempts to tamper with the right of citizens to choose who shall govern them.
We greet the assertion of an anticorruption interest here with a measure of skepticism, for the loan-repayment limitation is yet another in a long line of prophylaxis-upon-prophylaxis approaches to regulating campaign finance. . . . The Government instead puts forward a handful of media reports and anecdotes that it says illustrate the special risks associated with repaying candidate loans after an election. But as the District Court found, those reports “merely hypothesize that individuals who contribute after the election to help retire a candidate’s debt might have greater influence with or access to the candidate.” . . . That is not the type of quid pro quo corruption the Government may target consistent with the First Amendment. (Quotations and citations omitted).
As is often the case, how the Court approached the question was decisive. This being a Roberts opinion, there was little examination of originalist sources, but that is partly because the Court has already settled its approach to political-campaign speech. In an ordinary lawmaking situation, balancing the burdens of regulation against the problem being solved is properly the job of legislators (a point Justice Elena Kagan’s dissent for the three liberals emphasized). Roberts is less than persuasive in claiming that there is no legitimate government interest at work in Section 304. But because the regulation is one limiting a core constitutional right at its most important point — political speech in the context of an election campaign — Roberts took the fine-tooth-comb approach to the evidence that we have seen him use in other cases ranging from the Voting Rights Act (Shelby County) to various Trump administrative rules (the travel ban and the Census citizenship question). Under that approach, he was unpersuaded that the government had met its burden of justifying the power it claimed to restrict the speech of people trying to win elections — often as citizens challenging their government.