Thanks to a win for Sen. Ted Cruz, R-Texas, in a lawsuit last week against the Federal Election Commission, campaign contributors now have a foolproof way to make sure the money they donate goes right into a winning congressional candidate’s personal bank account.
I’ll call this now-constitutionally protected scheme the post-election candidate loan repayment plan.
Post election contributions are included in the $2900 maximum per donor contribution per election cycle and can be made to a candidate who wins or loses. But post-election contributions are particularly appealing to donors who prefer to know that a candidate has won before they contribute
Contributors may want their money to go to the winning candidate’s personal funds, ensuring maximum gratitude and maximum probability of reciprocity (the Latin phrase for this is “quid pro quo,” but we’re not supposed to talk about that).
Thanks to Cruz’s successful lawsuit, candidates now can make unlimited use of a mechanism that gives these contributors a bigger voice in Washington.
In the suit, the U.S. Court of Appeals for the District of Columbia Circuit held that candidates for federal office and their campaign contributors have a constitutional right to deploy a scheme that works around both campaign finance laws and restrictions on personal gifts to members of Congress.
I’ll call this now-constitutionally protected scheme the post-election candidate loan repayment plan. Here’s how it works:
A member of Congress is running for re-election. He raises $6 million for his campaign by Election Day, but he wants to spend more. So he lends his campaign $1 million more from his personal funds. After he wins the election, he continues to raise money for the same campaign from donors who contribute money not for the purpose of winning that election or the next one but solely for the purpose of paying back the congressman. Their contributions go into his campaign bank account and out again into his personal bank account. Dollar for dollar, every post-election contribution these donors make goes directly to the congressman.
Now the D.C. Court of Appeals says that $250,000 in post-election payoffs is not enough.
The potential for corruption in this scenario is obvious. The economic reality of the transaction is that the post-election campaign contribution is a gift to the congressman. The congressman was willing to spend $1 million of his own money on his campaign, which is permissible under current campaign finance laws. But then, after he won the election, he solicited more contributions so he could get paid back by people willing to donate for the sole purpose of paying him back.
If we want to allow unlimited gifts to members of Congress, this post-election contribution and loan repayment should be allowed. But that’s not the rule. Both the Senate and the House have strict rules about gifts. Gifts to members from registered lobbyists are flatly prohibited, members may not solicit gifts as they do campaign contributions, and gifts from people other than members’ families and a few other sources are generally limited to no more than $50.
Post-election political fundraising and candidate loan repayment are potentially massive workarounds for the gift rules. This is one more way politicians and their campaign contributors, like some businesspeople, come up with clever ways to avoid the law.
Here we have people who, for whatever reason, did not contribute up to the allowed maximum campaign donation before the election to help the congressman win but who are willing to contribute after the election to pay off the congressman personally.
Federal election law probably should prohibit such post-election payoffs entirely. But for a variety of reasons, including to facilitate last-minute loans from candidates to their own campaigns, as well as to create a more even playing field between candidates who need to get paid back and millionaire candidates who don’t, federal election law opts for a compromise allowing such post-election payoffs up to a total of $250,000 per election cycle. This very high dollar limit is where Congress chose to balance the tradeoff between fighting corruption and giving candidates maximum flexibility in raising the money they need to run for office.
Explicitly saying there is a quid pro quo is a great way to book an extended stay in federal prison. But now the D.C. Court of Appeals says that $250,000 in post-election payoffs is not enough and that, indeed, the amount should be unlimited. This is because post-election payoffs of candidates are protected speech under the First Amendment. The court applied the high degree of scrutiny that federal courts generally apply to campaign finance regulations, imposing a high burden on Congress to demonstrate a strong likelihood that the statute prevents corruption. The court looks for demonstrable evidence that the arrangement facilitates quid pro quo corruption — that such gifts are given to candidates with the expectation of something in return — and finds none. The court then strikes down the $250,000 limit as unconstitutional. Of course, the court finds no demonstrable evidence of corruption because what it insists upon is evidence that a contributor asked the candidate for official action in exchange for the contribution. Such an express quid pro quo of official action for any campaign contribution, before or after an election, is bribery. Explicitly saying there is a quid pro quo is a great way to book an extended stay in federal prison. So, as with a great many campaign contributions, it’s “wink-wink, nod-nod.” But in these situations, the usual professed motive for campaign contributions — the donor’s desire to help a good candidate win — is absent. The candidate has already won. Another difference is that this campaign contribution goes directly into the candidate’s pocket and benefits him personally. Yes, there is a dollar limit on individual contributions to campaigns, but corporations and other entities can establish political action committees that raise massive amounts of individual contributions from their employees, customers, suppliers and others for political campaigns, including, now, a campaign war chest that can be used for an unlimited dollar amount of post-election payoffs of loans from the candidates themselves. This latest campaign finance holding is perhaps to be expected. Since the Supreme Court decided Citizens United v. FEC in 2009, federal courts have bent over backward to protect money as speech. Free flow of speech is the engine of democracy, and these judicial holdings assume that because money buys more speech, money should be protected, as well. It does not matter that, as the late federal judge John T. Noonan Jr. recognized in his book “Bribes: The Intellectual History of a Moral Idea,” money is one of the most ancient ways of corrupting public officials and that fighting corruption is a moral idea essential for the survival of representative democracy. It does not matter that Congress itself at least in part embraced this moral idea of fighting corruption in enacting campaign finance laws limiting the flow of money to candidates and their campaigns. Federal judges, many of them appointed and confirmed by the Senate on the promise that they would not engage in judicial “activism” in striking down laws enacted by representatives of the people, are willing to make at least one exception. Laws regulating money, and the relationship between public officials and the corrupting influence of money, are very likely to be held unconstitutional. This is a state of affairs that will not last. Either this line of cases will be reversed, whether by a less activist federal judiciary or by constitutional amendment, or we will cease to live in a representative democracy. We will have the best elected officials that money can buy. And now the money need not be given solely for the purpose of electing a candidate, but simply to pay off the candidate after he has already won and is ready to do what is expected in return.
Richard W. Painter
Richard W. Painter was the chief White House ethics lawyer from 2005 to 2007 under President George W. Bush. He is the S. Walter Richey Professor of Corporate Law at the University of Minnesota and is a graduate of Harvard College and Yale Law School. 
