May 16, 2022 - Politics & Policy

Supreme Court makes it easier for rich donors to bankroll candidates

Illustration of a podium with a slot extruding twenty dollar bills

Illustration: Natalie Peeples/Axios

The Supreme Court has boosted high-dollar donors' abilities to personally enrich candidates — including ones like the wealthy individuals pouring millions into their own campaigns this year — if they prevail on Election Day.

Why it matters: The court's ruling Monday is one more decision bypassing post-Watergate and other campaign finance restrictions. A 6-3 majority struck down rules limiting candidates from raising funds after their elections to repay the money they loaned to their campaign.

  • Wealthy candidates who lend millions to their campaigns can secure public office, then go to their top donors for sums that could reach the millions.
  • They can seek contributions to repay themselves and then deposit the money directly into their personal bank accounts.
  • While the donations are capped at the amount of the candidate's campaign loan, the risk of corruption is "self-evident and acute," according to the Campaign Legal Center.
  • The good-government group filed an amicus brief in the case.

Between the lines: The current midterm cycle has seen a huge number of wealthy self-funders.

Ninety-five House and Senate candidates have already loaned their campaigns more than $250,000, according to Federal Election Commission records.

  • In Tuesday's U.S. Senate primary in Pennsylvania, celebrity doctor Mehmet Oz faces off against hedge funder David McCormick and former Trump administration official Carla Sands.
  • Oz has loaned nearly $15 million to his own campaign. McCormick has loaned $11 million and Sands has chipped in $3.9 million for her race.

In Arizona, Republican businessman Jim Lamon has loaned his Senate campaign $13 million.

  • In Alabama, Republican Mike Durant has loaned about $2.6 million to his Senate campaign.
  • In Wisconsin, Democrat Alex Lasry has loaned his Senate campaign more than $7 million. His primary opponent, Sarah Godlewski, has loaned hers nearly $3 million.

The big picture: Under prior campaign finance rules, candidates could only raise up to $250,000 after an election to reimburse themselves.

On Monday, the high court struck down that cap.

  • Under the court's ruling, a candidate who lends millions to his or her campaign is now in a position to solicit that — plus far more in traditional donations — after they've been elected and hold office.
  • While individual donors are still bound by the per-election contribution cap — $2,900 in 2022 — the Supreme Court decision means candidates can collect far more from them on aggregate to repay their own loans.
  • Wealthy candidates often argue they will avoid any conflicts of interest while in office by self-financing their campaigns. Now, they have an unfettered way to make themselves whole after voters have gone to the polls.

Between the lines: The Supreme Court disagreed with any concerns as it ruled in a case brought by Sen. Ted Cruz (R-Texas).

The Harvard Law graduate argued the $250,000 cap violated the First Amendment without addressing legitimate corruption concerns.

  • "The Government is unable to identify a single case of quid pro quo corruption in this context," wrote Chief Justice John Roberts in his majority opinion.
  • The key question is what constitutes that sort of conduct.
  • Under Supreme Court precedent, it requires an explicit quid pro quo; buying access and influence generally isn't considered a corrupt act in itself.

What to watch: The court's decision is retroactive.

  • Campaigns this cycle that have candidate loans on the books will be able to take advantage of the new rules after their elections.

What they're saying: Tara Malloy, Campaign Legal's senior director for campaign finance litigation, called the court's decision "disappointing but not surprising."

  • "The court didn't really change its position, but it is extremely blinkered view of corruption," Mallow told Axios in an interview.
  • The one "silver lining," she said, was that the court "ruled relatively narrowly" and did not strike down broader restrictions on campaign contributions.
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